Question

Determine the amount to be paid in full settlement of each of two invoices (a) and (b), assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period. If required, round the answers to the nearest dollar.

	Merchandise		Freight Paid by Seller		Freight Terms		Returns and Allowances
a.	$8,900		$500			FOB shipping point, 2/10, n/30	$1,800
b.	4,700		100			FOB destination, 1/10, n/30	900

a.	$
b.	$

Answer 1

a.	$7,458
	Purchase	$8,900
	Less: return	$1,800
	Net Purchase	$7,100
	Less: Discount ($7,100 x 2%)	$142
		$6,958
	Add: Freight	$500
	Total Amount Paid	$7,458
	Note: FOB Shipping point Under this, the freight is to be paid by the buyer
b.	$3,762
	Purchase	$4,700
	Less: return	$900
	Net Purchase	$3,800
	Less: Discount ($3,800 x 1%)	$38
	Total Amount Paid	$3,762