A customer owes KSh 90,000 and pays promptly, taking a settlement discount of 3%. How much cash is received?

Answer and explanation

Correct answer: D. KSh 87,300

  1. Step 1: Discount allowed = 3% x 90,000 = 2,700. Step 2. Cash received = 90,000 - 2,700 = KSh 87,300. Answer: KSh 87,300. Why not the others: KSh 2,700: That is the discount itself. KSh 92,700: That adds the discount instead of deducting it. KSh 90,000: That ignores the discount.

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