Question

Determine the amount to be paid by the buyer for full settlement of each invoice, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.

	Merchandise	Transportation Paid by Seller	Transportation Terms	Returns and Allowances
(a)	$8,900	$220	FOB Shipping Point, 1/10, net 30	$900
(b)	$10,200	$93	FOB Destination, 2/10, net 45	$2,200

a.	$
b.	$

Answer 1

	FOB shipping point menas transportation cost upto shipping point is paid y seller
	1/10 net 30 Means if paid in 10 Days than there is discount of 1%, Normal credit 30 Days
	2/10 net 45 Means if paid in 10 Days than there is discount of 2% Normal Credit 45 Days
		Transaction "a"	Transaction "b"
	Merchandise	$                  8,900	$                10,200
	Less: Return and allowances	$                     900	$                  2,200
	Net Sales	$                  8,000	$                  8,000
	Less: Discount	$                        80	$                      160
		(1% of $ 8000)	(2% of $ 8000)
	Net Amount receivalbe	$                  7,920	$                  7,840
	Answer =
	A.	$                  7,920
	B.	$                  7,840