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20 November, 20:52

Willetta Company purchases inventory for $22,000 with terms 2/10, n/30. It then returns $3,200 of the inventory purchased to the supplier and also receives an allowance for defective inventory of $220. The company pays the amount due within the discount period. What is the amount of the discount that will be taken? (Round your answer to the nearest dollar amount.)

a. $320

b. $436

c. $372

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  1. 20 November, 21:34
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    c. $372

    Explanation:

    Terms of sale 2/10, n/30 means there is a discount of 2% is available on payment of due amount within discount period of 10 days after sale with net credit period of 30 days.

    As per given data

    Purchases = $22,000

    Sales return = $3,200

    Defective Allowance = $220

    Receivable = $22,000 - $3,200 - $220 = $18,580

    As the payment is made within discount period, so discount will be availed on the amount due

    Discount = $18,580 x 2% = $372
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