Question

32.

a.

An invoice for the amount of $7910.00 is dated 5/26 and received on 6/16. The terms are 8/10 EOM. Determine the discount amount, if any.

	a.	$632.80
	b.	$7291.75
	c.	$651.72
	d.	$0.00
	e.	$7267.40
	f.	None of the above.

b.

A buyer has established a markup on retail of 31.5% for a line of t-shirts. The buyer plans to price them at $14.00. Determine the price he will have to pay to maintain his plan.

	a.	$9.59
	b.	$12.69
	c.	$11.95
	d.	$8.34
	e.	$7.54
	f.	None of the above.

Answer 1

a.

8/10 EOM is a kind of payment term which states that the payment should be made within end of the month in order to earn a discount of 8% on the amount, in any case the payment should be made by 10th of the next month i.e 6/10. Hence, if the customer would have made the payment by 5/31, then the discount would be $7,910 - $632.8 (discount of 8%). Since the payment is made after end of the month and by delay of 6 days, there is no discount. The correct answer is d '$0.00'.

b.

The markup percentage can be calculated with the following formula:

Markup percentage = Selling price - cost / cost * 100

By putting all the above option at cost, we can find the cost,

31.5 % = $14 - 9.59 / 9.59 * 100

           = $4.41 / 9.59 * 100

   31.5% = 45.98%

After calculations we can find out that number on both the side is $4.41

Therefore, 31.5% of $14 is equals to 45.98% of $9.59

Hence, the correct answer is a. '$9.59'