Asked by Julio Cesar Meirelles on May 06, 2024
Verified
Details of a purchase invoice and related credit memo are summarized as follows:
Invoice:
Cost of merchandise listed on purchase invoice
$6,500
Prepaid freight charge added to invoice
150
Terms, FOB shipping point, 1/10, n/eom
Credit memo: Cost of merchandise returned
$1,500
Assume that the credit memo was received prior to payment and that the invoice is paid within the discount period. Determine the following:
(a)Amount of the cash discount allowed.(b)Amount to be paid by the purchaser if the discount is taken.(c)Cost of the merchandise to the purchaser if the discount is not taken.
FOB Shipping Point
A term used in shipping contracts to indicate that the seller is responsible for delivering goods to a shipping point, and the buyer is responsible for all costs and risks of loss or damage to goods from that point forward.
Credit Memo
A document issued by a seller that reduces the amount owed by a buyer, typically due to a return or refund.
Cash Discount
A cash discount is a reduction in the price of goods or services allowed by the seller to encourage prompt payment by the buyer.
- Chronicle the purchasing and payment procedures, incorporating the role of discounts.
- Accurately compute and document the costs of inventory.
Verified Answer
Learning Objectives
- Chronicle the purchasing and payment procedures, incorporating the role of discounts.
- Accurately compute and document the costs of inventory.
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