Question

A sales invoice included the following information: merchandise price, $7,700; terms 1/10, n/eom, FOB shipping point with prepaid freight of $1,200 added to the invoice. Assuming that a credit for merchandise returned of $1,000 is granted prior to payment and the invoice is paid within the discount period, what is the amount of cash that should be received by the seller?

a.$990

b.$7,833

c.$9,813

d.$8,823

Answer 1

Answer:

Sale Value of Goods = $7,700
Freight Charges = $1,200
Total Invoice Value = $7,700 + $1,200
Total Invoice Value = $8,900

Goods Returned = $1,000

Amount due from Sale of Goods = $7,700 - $1,000
Amount due from Sale of Goods = $6,700

Discount allowed = $6,700 * 1%
Discount allowed = $67

Amount received by Seller = Invoice Value – Goods Returned – Discount allowed
Amount received by Seller = $8,900 - $1,000 - $67
Amount received by Seller = $7,833