Details of a Purchase Invoice, Credit Terms, and a Purchase

question 47

Short Answer

Details of a purchase invoice, credit terms, and a purchase return are shown below. Assume the credit memo was received and payment made within the discount period. $\begin{array} { l r } \text { Cost of merchandise as shown on purchase invoice } & \$ 9,200 \\\text { Cost of merchandise returned } & 3,700 \\\text { Transportation charges, terms FOB shipping point } & 500 \\\text { Credit terms } & 2 / 10 \mathrm { n } / 30\end{array}$ Compute the following:
a)amount of discount
b)amount paid by purchaser, within the discount period, including freight, if applicable
c)amount paid by purchaser if paid after expiration of discount including freight, if applicable

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Definitions:

Financial Ratios

Financial ratios are quantitative measures derived from financial statement analysis to evaluate the financial performance, condition, and valuation of a company.

Loan Decision

The process undertaken by lenders to determine whether to make funds available to borrowers under certain terms.

Analytical Tool

Instruments or methodologies used to analyze or interpret data to make decisions or solve problems.

Benchmark Comparison

The process of comparing business metrics or performance against a standard or set of best practices to evaluate relative performance.