Question:-
A company invoices a customer for $400 plus sales tax at 17.5%.The company offers all customers a settlement discount of 2% if payment is received within 7 days.
What is the total on the invoice ,including sales tax at 17.5%?
A)$470
B)$460.60
C)$468.60
D)$392
According to kaplan the answer is C which is definitely not correct because if we assume the discount has been taken then we will add $68.60 with $392 not with $400.So the answer is B .
What do you people think ?
FIA Forums
Cannot understand this really confused here
Thanks frank for the help :)
Yes I think the correct is B because first i multiply
Sales price times offered discount although the customer paid the within the settlement then plus sales tax.
400*2% = 8 discount so
so sales price minus settlement discount 400-8=392
sales price times Sales tax
392*17.5%=68.8
so 392+68.8=460.6
so the answer is B
actually calculation it is my favorite Subject
I agree with Tahir, c is the correct answer because this is a cash discount which will be reflected in the accounts.
If it was a trade discount, B would have been the answer as trade discounts are not recorded as so do not form part of the double entry system
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