A Company Purchased $10,000 of Merchandise on June 15 with Terms

question 40

Multiple Choice

A company purchased $10,000 of merchandise on June 15 with terms of 3/10,n/45,and FOB shipping point.The freight charge,$500,was added to the invoice amount.On June 20,it returned $800 of that merchandise.On June 24,it paid the balance owed for the merchandise taking any discount it is entitled to.The cash paid on June 24 equals:

• A)$9,224.
• B)$10,200.
• C)$10,500.
• D)$10,300.
• E)$9,424.

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Definitions:

Transitory Component

Temporary fluctuations in financial or economic data that do not reflect long-term trends and are expected to revert over time.

Permanent Earnings Component

The part of a company's net income expected to continue in the future, excluding any extraordinary or one-time events.

Valuation-Relevant

Describes information or data that can significantly impact the valuation of a company's assets, liabilities, or equity.

Transitory Components

Temporal elements in financial reports or economic indicators that are expected to exist only for a short period and do not reflect the long-term performance or value.