Determine the amount to be paid in full settlement of each of two invoices (a) a

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.                     $9,000                                                            $300                                       FOB shipping point, 2/10, n/30             $1,150

b.                                3,700    700                                        FOB destination, 1/10, n/30 900

A.__________

B.____________

Explanation / Answer

SOLUTION

A. $9,000 - $1,150 - [($9,000 - $1,150)*2%] + $300

= $9,000 - $1,150 - $157 + $300

= $7,993

B. $3,700 - $900 - [($3,700 - $900)*1%]

= $3,700 - $900 - $28

= $2,772

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