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.

	Merchandise		Freight Paid by Seller		Freight Terms		Returns and Allowances
a.	$36,000		$800			FOB destination, 1/10, n/30	$4,000
b.	44,900		375			FOB shipping point, 2/10, n/30	2,400

Answer 1

Calculate amount paid

	a	b
Merchandise cost	36000	44900
Less: Return and allowance	-4000	-2400
Net purchase	32000	42500
Less: Discount	-320	-850
Cost of purchase	31680	41650
Add: Freight paid		375
Amount paid	31680	42025