Question

Determine the amount to be paid in full settlement of each invoice, 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.	$4,400		$238	FOB Shipping Point, 1/10, net 30	$400
b.	$5,800		$90	FOB Destination, 2/10, net 45	$1,300

Answer 1

since all invoices are paid within discount period, the amount to be paid can be known using the following formula;

(sale price - returns)*(1- discount rate) + returns and allowances

now,

consider a.

amount to be paid in full settlement = (4,400-400)*(1-0.01) + 238

=>$4,198.

consider b.

amount to be paid in full settlement = (5800-1300)*(1-0.02) + 90

=>$4500.