Final answer:
To calculate the final amounts to be paid on each invoice, we add the paid freight to the merchandise cost, apply the 1% discount, and subtract it from the total cost. The resulting payments are rounded to the nearest dollar, which gives us the final amounts of $4,816 (with freight) and $4,500 (without freight), making option C the correct answer.
Step-by-step explanation:
The question involves calculating the amount to be paid for invoices after accounting for certain adjustments such as returns, allowances, and cash discounts within credit terms. Given the merchandise cost of $4,500, freight terms FOB Shipping Point, paid freight of $365, and a discount term of 1/10, net 30, the task is to compute the final settlement amount for each invoice.
The goods are FOB Shipping Point, meaning the buyer adds freight costs to the merchandise cost. Therefore, the merchandise ($4,500) plus the freight ($365) equals $4,865. This is the amount before any discounts.
The discount of 1% applies to this total, because the payment is made within the discount period, reducing the cost by $48.65 ($4,865 x 1%). Subtracting this discount from the total cost of $4,865 gives us $4,816.35 as the adjusted total, which should be rounded to the nearest dollar as per the options given, resulting in $4,816.
Therefore, the total amounts to be paid in full settlement, considering all the adjustments, are:
- a. $4,816 including the freight cost.
- b. $4,500 if the freight cost is not considered since it was paid by the seller.
The correct answer to the student's question, applying the above calculations and rounding, would be option C) $4,365; $4,165, assuming both invoice amounts referred to are inclusive of the paid freight.