A company purchased $10,100 of merchandise on June 15 with termsof 2/10, n/45, and FOB shipping point. The freight charge was $550and was prepaid by the seller. On June 20, it returned $880 of thatmerchandise. On June 24, it paid the balance owed for themerchandise taking any discount it is entitled to. The cash paid onJune 24 equals:
a) $10,650.
b) $10,430.
c) $9,586.
d) $10,330.
e) $9,224.

C. $9568

Explanation:

Given that

FOB shipping point = $550

2% discount of 10100 = $9898

Amount of merchandise returned = $880

Therefore, amount paid on 24th

= 9898 - 880 + 550

= 9018 + 550

= 9568.

Thus, total amount to be paid by the company on merchandise is $9,568

NOTE

FOB shipping means that the buyer pays of the shipping cost.

Also,

2/10, n/45 means that the buyer gets a 2% discount on purchase that must be paid within 45 days.

=$ 9568.

Explanation:

From the question, we have the following values as follows

Marchandise purchased = $10,100

Amount of merchandise returned = $880

FOB shipping point = $550

We have the two calculated as follows,

= (2/100)× $10,100

=0.02× %10,100

= $202

The discount amount will be

$10,100 - $ $202

=$9,898

Amount that is paid on 24th will be

= $9898 - $880 + $550

=$ 9018 + $550

=$ 9568.