Question

PE 6-4A 

Determine the amount to be paid in full settlement of each of two invoices, (a) and (b), assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.

	Merchandise		Freight Paid by Seller		Freight Terms		Returns and Allowances
a.	$90,000		$1,000			FOB shipping point, 1/10, n/30	$15,000
b.	110,000		1,575			FOB destination, 2/10, n/30	8,500

PE 6-4B 

Determine the amount to be paid in full settlement of each of two invoices, (a) and (b), assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.

	Merchandise		Freight Paid by Seller		Freight Terms		Returns and Allowances
a.	$36,000		$800			FOB shipping point, 1/10, n/30	$4,000
b.	44,900		375			FOB destination, 2/10, n/30	2,400

Answer 1

6 4- A

	a	b
Merchandise value	90,000	110,000
Less: Returns	15,000	8,500
Net purchases	75,000	101,500
Discount @1% / 2%	750	2030
Net purchases of discount	74,250	99,470
Add: Freight	1000
Amount to be paid in full settlement	75,250	99,470

6 4 B

	a	b
Merchandise value	36,000	44,900
Less: Returns	4,000	2,400
Net purchases	32,000	42,500
Discount @1% / 2%	320	850
Net purchases of discount	31,680	41,650
Add: Freight	0	375
Amount to be paid in full settlement	31,680	42,025