Cash discounts and purchase returnsOn March 6, 2011. Bob’s Imports purchased merchandise f...

Cash discounts and purchase returns

On March 6, 2011. Bob’s Imports purchased merchandise from Watches Inc. with a list price of $31,000, terms 2/10, n/45. On March 10, Bob’s returned merchandise to Watches Inc. for credit. The list price of the returned merchandise was $6,400. Bob’s paid cash to settle the accounts pay­able on March 15, 2011.

Required

a. What is the amount of the check that Bob’s must write to Watches Inc. on March 15?

b. Record the events in a horizontal statements model like the following one.

c. How much would Bob’s pay for the merchandise purchased if the payment is not made until March 20, 2011?

d. Record the payment of the merchandise in Event c in a horizontal statements model like the one shown above.

e. Why would Watches Inc. sell merchandise with the terms 2/10. n/45?