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21 November, 06:15

On June 15, Oakley Inc. sells inventory on account to Sunglass Hut (SH) for $7,500, terms 4/10, n/30. On June 20, SH returns to Oakley inventory that SH had purchased for $1,600. On June 24, SH completely fulfills its obligation to Oakley by making a cash payment. What is the amount of cash paid by SH to Oakley?

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  1. 21 November, 07:26
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    The correct answer is $5,664.

    Explanation:

    According to the scenario, the computation of the given data are as follows:

    Amount on Account = $7,500

    Returned inventory = $1,600

    So, we can calculate the total amount of cash paid by using following formula:

    Amount of cash paid = (Amount on Account - Returned inventory) * 96%

    By putting the value, we get

    Amount of cash paid = ($7,500 - $1,600) * 96%

    = $5,664
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