Question

Majestic Manufacturing sold Jordan's Furniture a living room set for an $8,650 list price with a 40% trade discount. The $175 freight (FOB shipping point) was not part of the list price. Terms were 5/10, n/30 ROG. The invoice date was June 14. Jordan's received the goods on August 02 and paid the invoice on August 04. What was the final price (including the cost of freight) of the living room set?

A) $5,190.00

B) $5,187.75

C) $5,475.00

D) $5,660.50

Answer 1

The final price for Jordan's Furniture after applying the trade discount and adding the freight charges is $5,365. The payment terms discount was not applied, as payment was made after the discount period.

Step-by-step explanation:

The final price of the living room set purchased by Jordan's Furniture from Majestic Manufacturing, including the cost of freight, can be calculated as follows:

• List price of the living room set: $8,650
• Trade discount of 40%: $3,460 (40% of $8,650)
• Discounted price: $5,190 ($8,650 - $3,460)
• Freight charges (FOB shipping point): $175
• Total cost including freight: $5,365 ($5,190 + $175)

Despite terms of 5/10, n/30 ROG, the discount is not applicable because Jordan's Furniture paid the invoice after the discount period had ended. Therefore, the final cost is the discounted price plus freight.