Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases.The company purchased $9,750 of merchandise on August 7 with terms 1/10,n/30.On August 11,it returned $1,500 worth of merchandise.On August 16,it paid the full amount due.The amount of the cash paid on August 16 equals:
A)$8,167.50.
B)$9,652.50.
C)$9,750.00.
D)$8,250.00.
E)$8,152.50.

Question

Quizplus · Accepted Answer

The company will receive a discount of 1% ($9,750 x 1% = $97.50) if they pay within 10 days of the purchase. However, since they returned $1,500 worth of merchandise, their new total is $8,250 ($9,750 - $1,500). They will still receive the 1% discount on this new total, which would be $82.50 ($8,250 x 1% = $82.50). Therefore, the cash paid on August 16 would be the new total minus the discount: $8,250 - $82.50 = $8,167.50.

Juniper Company Uses a Perpetual Inventory System and the Gross