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12 April, 17:44

After the amount due on a sale of $28,000, terms 2/10, n/eom, is received from a customer within the discount period, the seller consents to the return of the entire shipment for a cash refund on March 1. The cost of the merchandise returned was $16,800.

Required:

(a) What is the amount of the refund owed to the customer?

(b) What is the amount of the refund owed to the customer?

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Answers (1)
  1. 12 April, 19:28
    0
    The correct answer is $27,440.

    Explanation:

    According to the scenario, computation of the given data are as follow:-

    Term 2/10, n/eom shows 2% percent discount

    Discount on sale = $28,000 * 2:100 = $560

    (a). We can calculate the account receivable turnover by using following formula:-

    Cash refund owed to customer = Amount due on sale - Sales discount

    By putting the value, we get

    = $28,000 - $560

    = $27,440

    The amount of the refund owed to the customer is $27,440.

    (b). This is same as part (a).

    So the amount of the refund owed to the customer is $27,440.
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