Krans LTD bought merchandise on credit for R8 329 on 13 may 2019. Merchandise to the value of R1210 was returned on 15 may 2019.

Question

Krans LTD settle their account on 20 may 2019 and received a settlement discount of 7%

Calculate the amount Krans Ltd paid to settle and reconcile their account on 20 may 2019. Show all calculations

Answer 1

To determine the amount Krans LTD paid to settle and reconcile their account on May 20, 2019, we need to follow these steps:

1. Calculate the total merchandise purchased.

   • Total merchandise bought: R8,329
   • Returned merchandise: R1,210

   \[ \text{Net Merchandise Purchased} = \text{Total Merchandise Bought} - \text{Returned Merchandise} \] \[ \text{Net Merchandise Purchased} = R8,329 - R1,210 = R7,119 \]

2. Calculate the settlement discount.

   • Settlement discount rate: 7%

   \[ \text{Settlement Discount} = \text{Net Merchandise Purchased} \times \text{Settlement Discount Rate} \] \[ \text{Settlement Discount} = R7,119 \times 0.07 = R498.33 \]

3. Calculate the amount payable after the discount.

   \[ \text{Amount Payable} = \text{Net Merchandise Purchased} - \text{Settlement Discount} \] \[ \text{Amount Payable} = R7,119 - R498.33 = R6,620.67 \]

4. Final result:
   Krans LTD paid R6,620.67 to settle and reconcile their account on May 20, 2019.

Summary of Calculations:

• Net Merchandise Purchased: R7,119
• Settlement Discount: R498.33
• Amount Paid: R6,620.67

So, the total amount paid by Krans LTD to settle their account is R6,620.67.