Question

Bailey Company purchased goods with the following terms and details:

Sales price, $14,000
Terms, 1/10, n/30
Date of sale, September 7
Date of payment, September 18
Returns and allowances (before payment), $1,600
Shipping, FOB Destination, $290, prepaid by seller

Required:

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

Answer 1

As Bailey company paid after 10 days, no sales discount is applicable.

As goods are shipped FOB destination, freight is borne by the seller.

Amount to be paid

= Sales - Returns

= 14,000 - (1,600)

= 12,4000