Question

Morgan Company received from Lee Company an invoice dated September 27. The terms were 2/10 EOM. The list price on the invoice was $5,000 (freight not included). Morgan receives a 9/7 chain discount. Freight charges are Morgan's responsibility, but Lee agreed to prepay the $150 freight charge. Morgan pays the invoice on November 9. What does Morgan pay, Lee? (Round your answer to 2 decimal places.)

* I kept getting 4,316.87 and shows that is wrong so please show work so I can see what I did wrong.

Answer 1

Invoice date	27-Sep
Payment date	9-Nov
Payment days	43
Since the payment was made in 43 days, the cash discount 2/10 is not met and
hence no cash discount is given.
Now let's calculate the chain discount pricing.
Invoice price	5000
Chain discount	9/7
Selling price=	Invoice price * (1- Discount-1) * (1-Discount-2)
Selling price=	5000*(1-9%)*(1-7%)
Selling price=	$4,231.50
Since Freight is Morgan's responsibility, This also will be paid by Morgan to Lee
Total payable amount=	4231.50+150
Total payable amount=	$4,381.50