Question

A manufacturer of women’s blouses quoted terms of 3/10, n/30, EOM and grants trade discounts to in the amounts of 15 percent, 10 percent, and 4 percent. The list price of the blouses is $400 per dozen. A retailer receives an invoice dated October 29 for nine dozens of these blouses. The invoice is paid December 2. What is the net cost to the retailer per blouse?

Invoice amount = $400/doz x 9 = $3,600
Dated: October 28th
Arrives: November 11th
Paid: December 2nd

Terms:

Three trade discounts that must be taken first before decision is made whether or not eligible for cash discount.15/10/4

3% cash discount if paid in 10 days, otherwise full amount of invoice is due in 30 days.

EOM dating allows the discount period to begin at the end of the month instead of the date on the invoice. In this case we have a special dating issue, since the invoice is dated on October 28th – that is, the discount period starts on December1st instead of November 1st.   Invoice is paid on December 2nd so they are eligible for the cash discount.

Answer 1

under this case, The discount period starts from Dec 1, and the payment is made on Dec-2 so the buyer is eligible for the discount which is given by the seller and for that we need to check how much discount is available to the buyer.

On Purchase of 9 dozens of blouses, the value comes at $3,600.

on Dec 2 the buyer is liable to pay 3600-3% trade discount

that is $3600-$108=$3492.

So as he is liable to pay $3492 after the discount received the cost to the manufacturer for per piece blouse will be $28-$29.