A customer owes KSh 64,000 and pays promptly, taking a settlement discount of 5%. How much cash is received?

Answer and explanation

Correct answer: B. KSh 60,800

  1. Step 1: Discount allowed = 5% x 64,000 = 3,200. Step 2. Cash received = 64,000 - 3,200 = KSh 60,800. Answer: KSh 60,800. Why not the others: KSh 3,200: That is the discount itself. KSh 67,200: That adds the discount instead of deducting it. KSh 64,000: That ignores the discount.

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