A business had a balance at the bank of $5,000 at the start of the month. During the following month, it paid for materials invoiced at $2,000 less trade discount of 20% and cash discount of 15%. It received a cheque from a customer in respect of an invoice for $400, subject to cash discount of 5%.
What was the balance at the bank at the end of the month?
Answer
| $ | |
| Opening bank balance | 5,000 |
| Payment ($2,000 – $400 ) x 85% | (1,360) |
| Receipt ($400 – $20) | 380 |
| Closing bank balance | 4,020 |