Merchandise subject to terms 3/10, n/30, FOB shipping point, is sold on account to a customer for $18,000. The seller paid transportation costs of $1,500 and added that amount to the invoice. The seller issued a return of merchandise memorandum for $4,000 prior to payment. What is the amount of the cash discount allowable to the buyer?
a. $1,160
b. $420
c. $1,305
d. $435
Answer : b. $420
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