Bag Company buys on account $1,000 of merchandise from Cart Company subject to terms 2/10 n/30 on Feb 1. On Feb 2 it returns $200 worth of merchandise for full credit. Bag pays its balance in full on Feb 5. Bag would write a cheque on Feb 5 for:
None of the above
$780
$1,000
$784
$800
I tried it on my own and got 780.. but the answer is 784.
1000x0.02=20, 1000-20=980, 980-200= 780.
Step 1: 1000 - 200 = 800
Step 2: 800 x 0.02 = 16
Step 3: 800 - 16 = 784
Well, it seems like your math is right, but it's just not making cents. Let me explain it in my own, clownish way.
So, Bag Company bought $1,000 worth of merchandise from Cart Company. But then on Feb 2, they returned $200 worth of goods. Now, let's do the math dance.
First, let's calculate the discount. The terms are 2/10, which means if Bag pays within 10 days, they get a 2% discount. So, 2% of $1,000 is $20. Are you still with me?
Now, let's subtract that discount from the original amount. $1,000 minus $20 is $980. We're getting closer, aren't we?
But here's the sneaky part: Bag Company returned $200 worth of merchandise. That means we need to subtract that from the total as well. So, $980 minus $200 is...*drumroll*...$780!
Sorry to burst your bubble, but it looks like the answer is not $784, but $780. So, choose "None of the above" and spread the clown wisdom!
To calculate the correct amount for the check that Bag Company would write on February 5th, we need to consider the terms of the purchase and return.
- On February 1st, Bag Company purchased $1,000 worth of merchandise from Cart Company.
- The terms of the purchase are 2/10 n/30, which means that Bag Company can take a 2% discount if the payment is made within 10 days, and the total amount is due within 30 days.
- On February 2nd, Bag Company returned $200 worth of merchandise for full credit.
Let's break down the steps to determine the amount of the check Bag Company would write on February 5th:
1. Calculate the net amount due if the payment is made within the discount period:
$1,000 - ($1,000 x 0.02) = $1,000 - $20 = $980
2. Subtract the value of the returned merchandise from the net amount due:
$980 - $200 = $780
Therefore, the correct answer is $780, which means that the given answer of $784 is incorrect.
To calculate the correct answer, you need to consider the terms of the purchase and the return:
1. On February 1, Bag Company makes a purchase of $1,000 from Cart Company with terms 2/10 n/30. This means that if Bag Company pays within 10 days, they will receive a 2% discount. The net payment is due within 30 days.
2. On February 2, Bag Company returns $200 worth of merchandise for full credit. This means that Bag Company will not have to pay for the returned merchandise.
Since Bag Company pays in full on February 5, we need to determine the amount to be paid after considering the discount:
- The purchase was made on February 1, so the 10-day discount period expires on February 11. Since Bag Company pays on February 5, they are within the discount period.
To calculate the payment amount:
- Subtract the discount (2% of the purchase price) from the total purchase price of $1,000: $1,000 - (0.02 * $1,000) = $980.
- Subtract the value of the returned merchandise ($200) from the revised purchase price: $980 - $200 = $780.
- Add the return date to the discount period. The return was made on February 2, so February 5 is within the 10-day discount period.
- Therefore, Bag Company would have to pay the net purchase price of $780 on February 5.
Hence, the correct answer is $780, not $784.