how much cash will ranger pay park in order to settle the accounts payable in fu
ID: 2425986 • Letter: H
Question
how much cash will ranger pay park in order to settle the accounts payable in full
On March 26, Ranger Company placed an order to purchase inventory on account from Park Company. The inventory had a list price of $80,000 in Park’s sales catalog and was carried on Park’s Balance Sheet at a historical cost of $50,000. Ranger is a regular customer and was able to negotiate a 15% trade discount as well as payment terms of 2/10, n/30. The inventory was shipped FOB Shipping point on March 30 with $2,000 of freight pre-paid. The goods arrived at Ranger’s facility on April 2. On April 3rd Ranger returned $5,000 of merchandise (the returned items had an original cost to Park of $3,125) and on April 5th Ranger paid the full balance owed to Park Company.
Explanation / Answer
Cash paid to settle Accounts Payable is $63,700 calculated as under:
Particulars Amount ($) Goods sold 80,000 Trade Discount 15% Discount value 12000 Amount after disount 68,000 FOB $2,000 Goods returned -5000 Final Vale 65,000 Net of tax 2% 1300 Cash Paid' 63,700Related Questions
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