Question

5. Solve the following:

a. Merchandise that had a billed cost of $580.00 was shipped on October 12 and received on October 21. The terms were 8/10 EOM. How much should be remitted if paid on each date?

October 30______ November 10______

Which is better and why?

B. Merchandise was invoices on April 29th with a total billed cost of $2,249.00. Terms are traditional retailing terms of 8/10 EOM.

-What is the last day the cash discount can be taken?

-If the invoice is paid on June 10, how much should be paid?

Answer 1

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a.
8//10 EOM means payment has to be released before 10th day of the following months to get discount
Hence, amount paid on or before 10th November will get discount
October 30	$580-($580*8%)	$        534
Nov 10	$580-($580*8%)	$        534
b.
What is the last day the cash discount can be taken
10th May	(EOM means end of the month)
If the invoice is paid on June 10, how much should be paid
Since for discount to be paid on or before 10th May, full amount of $2,249 wil be paid