Q 8.21: On May 12, 2017, Hudson Merchandise sold merchandise on account to Guzman Housewares for $6,897, terms 3/10, n/30. If Guzman returns merchandise with a sale price of $318 on May 15, 2017, what amount will Hudson record in their Cash account if Guzman pays in full on May 20, 2017

Cash received on account =$ 6381.63

Explanation:

The payment terms 3/10, n/30 implies that if  Guzman Housewares pays within the next 10 days of purchase, it will receive a discount of 3% of the net invoice amount and that the latest date for the settlement of bill is within the next 30 days of purchase.

The latest payment date to qualify for discount is May 27th i.e ( May 12 + 10) but the payment was made by May 20th , so this qualifies Guzman Housewares for the discount.

The net amount of cash received by Blue Company is  computed as follows:

Net sales = Gross sales - Returns inwards ( Sales returns)

               =  6,897 -  318 =$6,579

Cash received on account =  Net sales - discount

                            = =$6,579    - (3%×6,579) = $6,381.63

Cash received on account =$ 6381.63

answer(eu) is the correct answer;