Question

A buyer purchased 48 lamps with a list price of $50 each with trade discounts of 30%, 20%. Terms were 2/15, n/30; transportation FOB Factory. Shipping charges were $68. The lamps, shipped and billed October 18, were received October 25. If the bill was paid November 2, what amount should be paid to the vendor??

Answer 1

Its case of serial discount and value of invoice will be calculated as follows:

For serial discount we can determine a single discount as follows: (1 – (1-0.30)(1-0.20)) = 0.44 or 44%

List price given = $50

Less: Discount at 44% = -22

Price after discount = $28

X 48 Lamps

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$1344

Since 2% cash discount is applicable for payment within 15 days, and 2 November is within discount days, so additional 2% discount is applicable, now

$1344 – 1344 x 2% = $1,317.12

Add: shipping charges = $68

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Total payment to vendor = $1385.12