A company purchased $10,500 of merchandise on June 15 with terms of 2/10, n/45, and FOB shipping point. The freight charge, $750, was added to the invoice amount. On June 20, it returned $1,200 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:

,

$9,825

Explanation:

Merchandise Costs must include all costs related to acquisition of merchandise such as freight charges for valuation purposes - IAS 2.

Therefore Cost of Merchandise Purchased was, $10,500 + $750  = $11,250

Merchandise Purchase - June 15 :

Debit : Merchandise $11,250

Credit ; Discount Received (2% x $11,250) $225

Credit : Account Payable (98 % x $11,250)  $11,025

Return of Merchandise - June 20 :

Debit : Accounts Payable $1,200

Credit : Merchandise $1,200

Amount to be Paid - June 24 :

Debit : Accounts Payable ($11,025 - $1,200)  $9,825

Credit : Cash $9,825

i would say their habit of breaking down.

lives by a moral and ethical code