Question

Taylor Company purchased goods with the following terms and details:

Sales price, $11,000
Terms, 5/10, n/30
Date of sale, November 5
Date of payment, November 16
Returns and allowances (before payment), $1,300
Shipping, FOB Shipping Point, $80, prepaid by seller

Required:

Compute the amount that Taylor Company has to pay to the seller for the goods.

Amount that is paid to the seller: $

Answer 1

Sale Price $11,000

If the payment will be made within 10 days the company will get a discount of 5%.

Purchase date – November 5.

Hence he paid the amount on or before 15^th November he will get 5% discount.

Date of payment 16^th November.

Company is not eligible to get the discount.

Amount of Return and allowances $1,300

Shipping amount paid by the seller $80.

Amount that the company has to pay =

            Net purchase price                       = 11,000-1,300

                                                                        = $9,700

            Amount paid to the Seller        = 9,700 + 80

                                                                        = $9,780