Kern Company Sells Merchandise on Account for $8,000 to Block

question 30

Multiple Choice

Kern Company sells merchandise on account for $8,000 to Block Company with credit terms of 2/10, n/30.Block Company returns $1,600 of merchandise that was damaged along with a check to settle the account within the discount period.What is the amount of the check?

• A)$6,272
• B)$6,400
• C)$7,840
• D)$7,872

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Definitions:

Machinery

Industrial or commercial devices or equipment designed to perform specific tasks, often contributing to the production of goods.

Indirect Method

A way of preparing the cash flow statement where net income is adjusted for changes in balance sheet accounts to reflect cash transactions.

Current Assets

Assets that are expected to be converted into cash, sold or consumed within one year or the operating cycle, whichever is longer.

Current Liabilities

Financial obligations or debts that a company is expected to pay within one year or within its normal operating cycle, whichever is longer, including accounts payable, short-term loans, and accrued expenses.