A Sales Invoice Included the Following Information: Merchandise Price, $8,000;

question 21

Multiple Choice

A sales invoice included the following information: merchandise price, $8,000; terms 2/10, n/eom.Assuming that a credit for merchandise returned of $1,000 is granted prior to payment, and that the invoice is paid within the discount period, what is the amount of cash received by the seller?

• A) $6,840
• B) $7,000
• C) $6,860
• D) $7,840

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Definitions:

Amortization Policies

Guidelines or practices a company follows to systematically reduce the book value of its intangible assets over their useful life.

Capital Lease

A long-term lease agreement considered to be a purchase of the asset for accounting purposes, where the lessee assumes both the risks and benefits of asset ownership.

Residual Value

The forecasted sale price of an asset at the conclusion of its operational lifespan.

Economic Life

The period during which an asset is expected to be usable for the purpose it was acquired.