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?

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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 1 year ago

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