On August 7, Barstow Sales sold Mark Gittes merchandise having a ($ 6,250) catalog list price, less

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On August 7, Barstow Sales sold Mark Gittes merchandise having a \(\$ 6,250\) catalog list price, less a \(20 \%\) trade discount, terms \(2 / 10, \mathrm{n} / 60\). (Trade discounts were explained on page 200.) Gittes was unable to pay and was granted a time extension on receipt of his 60 -day, \(15 \%\) note for the amount of the debt, dated October 6 . Barstow Sales held the note until October 21, when it discounted the note at its bank at \(16 \%\). The note was not protested. Answer these questions:

a. How many dollars of trade discount were granted on the sale?

b. How many dollars of cash discount could Gittes have earned?

c. What was the maturity date of the note?

d. How many days were in the note's discount period?

e. How much bank discount was deducted by the bank?

\(f\). What were the proceeds of the discounted note?

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Financial Accounting

ISBN: 9780256091939

5th Edition

Authors: Kermit D. Larson, Paul B. W. Miller

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