Rondo s Sports Wear made the following purchases in June of
Rondo’s Sports Wear made the following purchases in June of the current year:
June 7 Purchased $5,000 of merchandise, terms 5/15, n/60, FOB shipping point
June 15 Purchased $2,500 of merchandise, terms 3/10, n/30, FOB shipping point
June 25 Purchased $7,500 of merchandise, terms 2/10, n/30, FOB destination

1. For each of the purchases listed, how many days does the company have to take advantage of the purchase discount?
2. What is the amount of the cash discount allowed in each case?
3. Assume the freight charges are 10% of the gross sales price. What is the amount of freight that Rondo’s must pay for each purchase?
4. What is the total cost of inventory for Rondo’s for the month of June, assuming that all discounts were taken?

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