Answer:
The correct answer is D that is $980
Explanation:
The amount of payment which is received by company B will be computed as:
Amount of payment = Purchase Amount - Return amount - Discount allowed
where
Purchase Amount is $1200
Return amount is $200
Discount allowed is 2%
So, computing amount of discount allowed as:
Discount allowed = (Purchase Amount - Return Amount) x % Discount allowed
= ($1,200 - $200) x 2%
= $1,000 x 2%
= $20
Putting the values above:
= Amount of payment = $1,200 - $200 - $20
= $1,000 - $20
= $980
NOTE: Discount is allowed as it is mentioned if the payment is received within 10 days then 2% will be allowed, which is mentioned as (2/10). So, company made purchase on 1 July and on July 11, the payment is made. Therefore, allowed the discount of 2%
