Merchandise with a list price of 7,500 and a cost $7,000 is sold on account, terms 1/10, n/30. Prior to payment, merchandise with a list price of $1,000 and a cost of $800 is returned. The correct amount is paid within the discount period.

Illustrate the effects of the foregoing transactions of the seller on the accounts and financial statements in the sequence indicated below.

(a) Sold the merchandise
(b) Received the returned merchandise
(c) Received the amount owned

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so far of what I understand is if paid within 10 days, the price will be discount by .01%. Otherwise, the total amount will be due within 30 days which can be the $7,500 or $1,000.

The part that confused me was what are those $7000 or $800 comes from?

Could this mean that it's seperated?