1. **State the problem:** ALLEJE Co. purchased merchandise with a list price of 40,700 subject to a 25% trade discount. They returned 5,000 worth of merchandise and paid within the discount period with terms 2/10, n/30. Freight prepaid is 1,500. 2. **Calculate the net purchase price after trade discount:** The trade discount is 25%, so the net price is calculated as: $$\text{Net price} = 40,700 \times (1 - 0.25) = 40,700 \times 0.75 = 30,525$$ 3. **Calculate the value of returned merchandise after discount:** Returned merchandise list price is 5,000, so after 25% discount: $$5,000 \times 0.75 = 3,750$$ 4. **Calculate the amount due after returns:** $$30,525 - 3,750 = 26,775$$ 5. **Calculate the cash discount for early payment:** Terms 2/10 means 2% discount if paid within 10 days. Discount is: $$26,775 \times 0.02 = 535.50$$ 6. **Calculate the amount paid:** $$26,775 - 535.50 = 26,239.50$$ 7. **Note on freight:** Freight prepaid means ALLEJE Co. does not pay freight separately, so freight cost is not added to amount due. **Final answer:** ALLEJE Co. paid 26,239.50 within the discount period after returns and trade discount.