On June 1, 2020, Pitt Corp sold merchandise with a list price of P50,000 to Bull...

On June 1, 2020, Pitt Corp sold merchandise with a list price of P50,000 to Bull on account. Pitt allowed trade discounts of 30%, 20%, and 10%. Credit terms were 2/15, n/40 and the sale was made FOB destination. Bull paid P2,000 of delivery costs. On June 12, 2020, how much did Pitt receive from Bull as full payment?

Expert Solution

As per the credit terms if bull makes payment within 15 days of purchasing the merchandise from Pitt corp., he will receive 2% discount. Date of purchase is 1st June,2020 and date of payment is 12 June, 2020. Hence bull will receive 2% discount as he made the payment within 15 days.

Thus the final payment received is by Pitt corp. is P 24,696.

Calculation of selling price List price Less: Trade discount (30%) Less: Trade discount (20%) P 50,000 (P 15,000) P 35,000 (P 7,000) P 28,000 (P 2,800) P 25,200 Less: Trade discount (10%) Selling price

Calculation of payment received Selling price Less: Discount (2%) Payment Received P 25,200 (P 504) P 24,696

ekkarill92 answered 2 years ago

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