Question

Sanders Company purchased goods with the following terms and details:

Sales price, $6,000
Terms, 4/10, n/30
Date of sale, April 1
Date of payment, April 11
Returns and allowances (before payment), $900
Shipping, FOB Destination, $195, prepaid by seller

Required:

Compute the amount that Sanders Company has to pay to the seller for the goods.

Answer 1

Sales price, $6,000
Terms, 4/10, n/30

Date of sale, April 1
Date of payment, April 11
Returns and allowances (before payment), $900
Shipping, FOB Destination, $195, prepaid by seller

Final amount due = Sales - Sales returns

= 6,000-900

= $5,100

Sales discount = Final amount due x Discount percentage

= 5,100 x 4%

= $204

Amount that Sanders company has to pay to the seller = Sale price - Sales returns - Sales discount

= 6,000-900-204

= $4,896

In case of FOB Destination, shipping charges are paid by the seller.

Kindly comment if you need further assistance. Thanks‼!