Hayes Warehouse distributes hardback books to retail stores and extends credit terms of 2/10, n/30 to all of its customers. During the month of June, the following merchandising transactions occurred
June 20 Purchased books on account for $720 from Cook Book Publishers, terms 1/15, n/30.
June 26 Paid Cook Book Publishers in full
if anyone can help me with this, I don't know how to do this one.
thanks
please someone respond to this, thanks!
To analyze the given merchandising transactions, we need to understand the terms and events involved. Let's break down each transaction and calculate the final outcome.
1. June 20: Purchased books on account for $720 from Cook Book Publishers, terms 1/15, n/30.
- This transaction states that Hayes Warehouse bought books from Cook Book Publishers for $720.
- The terms provided, 1/15, n/30, indicate that if payment is made within 15 days, a 1% discount can be applied; otherwise, the full amount is due within 30 days.
2. June 26: Paid Cook Book Publishers in full.
- This transaction states that Hayes Warehouse made a complete payment to Cook Book Publishers, settling the account for the purchased books.
Now let's analyze the financial impact and calculate the outcome.
1. Payment due within the discount period:
- The discount period is 15 days from the purchase date.
- Since June 26 (payment date) is within the discount period, the buyer is eligible for the discount, which is 1% of the total amount.
- To calculate the discount, multiply the purchase amount ($720) by the discount rate (1%):
Discount = $720 * 1% = $7.20
2. Payment due within the net period:
- The net period is 30 days from the purchase date.
- If the payment is not made within the discount period, the buyer has the full 30 days to make the payment.
- There will be no additional charges or discounts in this case.
To summarize the financial outcome:
- Without the early payment, Hayes Warehouse would owe the full amount of $720 within 30 days.
- With the 1% discount, the total amount due becomes $720 - $7.20 = $712.80.
In this case, Hayes Warehouse made the payment in full on June 26 without applying the discount, resulting in a payment of $720.
If you have any more specific questions or need further assistance, please feel free to ask!