Bowers Company purchased merchandise on account from Saunders Corp. for $8,200, terms 1/10, n/30. Bowers returned merchandise with an invoice amount of $1,700 and received full credit.

**a.**  If Bowers Company pays the invoice within the discount period, what is the amount of cash required for the payment? **If required, round the answer to the nearest dollar.**

fill in the blank 1 of 1$

**b.**  What account is debited by Bowers Company to record the return?

Let’s break down the two parts of the problem.

### a. Calculating the amount of cash required for the payment:

1. **Initial Purchase**: Bowers Company purchased merchandise worth $8,200.
2. **Returned Merchandise**: Bowers returned merchandise with an invoice amount of $1,700, receiving full credit. So, the adjusted purchase amount is:
   \[
   8,200 - 1,700 = 6,500
   \]
3. **Discount Terms**: The terms are 1/10, n/30, meaning that Bowers can take a 1% discount if they pay within 10 days.
   \[
   \text{Discount} = 6,500 \times 1\% = 6,500 \times 0.01 = 65
   \]
4. **Amount to Pay After Discount**:
   \[
   6,500 - 65 = 6,435
   \]

So, **the amount of cash required for the payment is $6,435**.

---

### b. Account Debited by Bowers Company for the Return:
When merchandise is returned, the account that is typically debited is **"Accounts Payable"** because the liability to the supplier (Saunders Corp.) is reduced by the return amount.

---

### Summary:
- **a.** The amount of cash required for the payment is **$6,435**.
- **b.** The account debited for the return is **Accounts Payable**.

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Do you want more details or have any questions? Here are 5 related questions to expand on this:

1. What happens if Bowers Company fails to pay within the discount period?
2. How would Saunders Corp. record the merchandise return from their perspective?
3. What is the journal entry for Bowers Company when the purchase is made on credit?
4. How does the discount affect Bowers Company's income statement?
5. What other types of discounts might a company like Bowers Company encounter in transactions?

**Tip:** When dealing with discounts, always make sure to subtract any returns before applying the discount to avoid overpaying!

Bowers Company purchased merchandise on account from Saunders Corp. for $8,200, terms 1/10, n/30. Bowers returned merchandise with an invoice amount of $1,700 and received full credit.

a. If Bowers Company pays the invoice within the discount period, what is the amount of cash required for the payment? If required, round the answer to the nearest dollar.
b. What account is debited by Bowers Company to record the return?

Learn how to calculate the discount and final payment amount for Bowers Company after a merchandise return. The problem involves subtracting the returned amount, applying a 1% discount on the remaining balance, and determining the account debited for the return. Suitable for Grades 10-12.

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