Final answer:
Forrest will pay the full invoice amount of $7,900 for their purchase from Talbots on either June 26 or July 25, as these dates are outside the discount period provided by the terms '5/10 EOM'.
Step-by-step explanation:
The subject of this question is business accounting, specifically focused on invoices and payment terms. The student is learning how different payment terms, like the ones in the question '5/10 EOM FOB', affect the final amount to be paid for a transaction.
On June 1st, Talbots of Boston sold $7,900 worth of goods to Forrest of Los Angeles with terms that offer a 5% discount if paid within 10 days after the end of the month of the invoice date, which is known as 5/10 EOM. Since Talbots prepaid the $95 freight and Forrest pays the invoice on June 26, no discount applies because the payment was made after the discount period ended. The total amount that Forrest will pay on June 26 is the full invoice amount, $7,900.
If Forrest pays the invoice on July 25, the situation is the same: The payment is after the 10-day discount period post end of the month, so no discount is applicable. The payment amount remains $7,900.