On March 6, 2006, Lie’s Imports purchased merchandise from The Glass Exchange with a list price of \($15,500\), terms 2/10, n/45. On March 10, Lie’s returned merchandise to The Glass Exchange for credit. The list price of the returned merchandise was \($3,200\). Lie’s paid cash to settle the accounts payable on March 15, 2006.

Required:

a. What is the amount of the check that Lie’s must write to The Glass Exchange on March 15?

b. Record the events in a horizontal statements model like the following one.

c. How much would Lie’s pay for the merchandise purchased if the payment is not made until March 20,2006?

d. Record the payment of the merchandise in Event c in a horizontal statements model like the one shown above.

e. Why would The Glass Exchange sell merchandise with the terms 2/10, n/45?

Transcribed Image Text:

Assets = Liab. + Equity Rev. - I Cash + Inv. = Accts. Pay. + Com. Stk. + Ret. Earn. Exp. == Net Inc. Cash Flow