Leno Company sells goods to the Fallon Company for $ 11,000. It offers credit terms of...

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Leno Company sells goods to the Fallon Company for $ 11,000. It offers credit terms of...

Leno Company sells goods to the Fallon Company for $ 11,000. It offers credit terms of 5/10, n/30. If Fallon Company pays the invoice within the discount period, Leno Company will record a debit to Cash in the amount of:

$550

$11,000

$10,450

$11,550

business accounting

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Answer 1

Answer #1

Sales = $11,000

Credit terms = 5/10, n/30

5% discount will be allowed if payment is made with in 10 days. Since fallon company pays the invoice within the discount period, discount of 5% will be allowed.

Discount amount = Sales c Discount percentage

= 11,000 x 5%

= $550

Cash received = Sales - Discount amount

= 11,000 - 550

= $10,450

Hence, Leno company will debit cash by $10,450

Third option is the correct option.

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Answer 2

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