A customer owes KSh 75,000 and pays promptly, taking a settlement discount of 4%. How much cash is received?
Answer and explanation
Correct answer: A. KSh 72,000
- Step 1: Discount allowed = 4% x 75,000 = 3,000. Step 2. Cash received = 75,000 - 3,000 = KSh 72,000. Answer: KSh 72,000. Why not the others: KSh 3,000: That is the discount itself. KSh 78,000: That adds the discount instead of deducting it. KSh 75,000: That ignores the discount.
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