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
To calculate the purchases, payments, and discounts related to the merchandising transactions in June, we can follow these steps:
1. Calculate the total purchases from Cook Book Publishers on June 20:
- The purchase amount is $720.
2. Determine the credit terms provided by Cook Book Publishers:
- The terms are 1/15, n/30.
- This means a 1% discount is offered if payment is made within 15 days, and the full amount is due within 30 days.
3. Calculate the payment made to Cook Book Publishers on June 26:
- The payment was made in full, which means the entire $720 purchase amount was paid.
4. Determine if a discount is applicable for early payment:
- Since the payment was made on June 26, which is within the 15-day discount period, a discount is available.
5. Calculate the discount amount:
- The discount percentage is 1%.
- Multiply the purchase amount by the discount rate: $720 x 1% = $7.20.
- The discount amount is $7.20.
6. Calculate the net amount paid:
- Subtract the discount amount from the purchase amount: $720 - $7.20 = $712.80.
- The net amount paid is $712.80.
To summarize:
- The total purchases from Cook Book Publishers in June were $720.
- The payment made on June 26 was $712.80.
- A discount of $7.20 was applied to the payment.