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.
Merchandise Freight Paid by Seller Freight Terms Returns and Allowances
a. $36,000 $800 FOB destination, 1/10, n/30 $4,000
b. 44,900 375 FOB shipping point, 2/10, n/30 2,400
Answer:
a. $31,680. Purchase of $35,640 [$36,000 – ($36,000 × 1%)] less return of $3,960 [$4,000 – ($4,000 × 1%)].
b. $42,025. Purchase of $44,002 [$44,900 – ($44,900 × 2%)] less return of $2,352 [$2,400 – ($2,400 × 2%)] plus $375 of shipping.