Question

Cynthia’s Pet Supplies, Inc., made the following purchases in March of the current year:
November 7 Purchased $2,500 of merchandise, terms 3/15, n/20, FOB shipping point
November 12 Purchased $4,300 of merchandise, terms 1/05, n/25, FOB destination
November 16 Purchased $6,200 of merchandise, terms 2/10, n/40, FOB shipping point
March 6 Purchased $3,500 of merchandise, terms 2/10, n/30, FOB shipping point
March 11 Purchased $5,250 of merchandise, terms 3/10, n/30, FOB destination
March 12 Purchased $4,000 of merchandise, terms 3/15, n/60, FOB shipping point

Requirements
1. For each purchase, by what date is the payment due, assuming the company takes advantage of the discount?
2. For each purchase, when is the payment due if the company does not take advantage of the discount?
3. In each case, what is the amount of the cash discount allowed?
4. Assume the freight charges are $100 on each purchase. For which purchase(s) is Cynthia’s responsible for the freight charges?
5. What is the total amount of inventory costs for the month of March, assuming that all discounts were taken?



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  • CreatedSeptember 01, 2014
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