Question

Freight Terms 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. If required, round the answers to the nearest dollar. Merchandise Freight Paid by Seller Freight Terms Credit for Refunds and Allowances a. $7,850 $200 FOB shipping point, 2/10, n/30 $1,150 b. 4,200 100 FOB destination, 1/10, n/30 700

Answer 1

a. Amount to be paid = Merchandise price - Returns and allowances - Discount + Freight In

= $7,850 - $1,150 - ($7,850-$1,150)*2% + $200

= $7,850 - $1,150 - $134 + $200

= $6,766

b. Amount to be paid = Merchandise price - Returns and allowances - Discount

= $4,200 - $700 - ($4,200-$700)*1%

= $4,200 - $700 - $35

= $3,465