Morgan Company received from Lee Company an invoice dated September 27. Terms were 2-10 EOM. List price on the invoice was $5000.00(freight not included). Morgan receives a 9/7 chain discount. Freight charges are Morgans resposibility but Lee agreed to prepay the $150. freight charge. Morgan pays the invoice November 9. What does Morgan pay Lee?

To calculate what Morgan pays Lee, we need to follow a series of steps:

Step 1: Determine the EOM (end of the month) date.
The invoice is dated September 27, so to calculate the EOM date, we need to add one month. This gives us October 27 as the EOM date.

Step 2: Calculate the discount period.
The terms of the invoice state 2-10 EOM. This means that if Morgan pays within 10 days starting from the EOM date, they are eligible for a discount. Hence, the discount period starts on October 27 and ends on November 6 (10 days after October 27).

Step 3: Apply the chain discount.
Morgan receives a 9/7 chain discount. This means that there are two discounts applied in sequence: a 9% discount followed by a 7% discount. To calculate the total discount percentage, we multiply (1 - 0.09) by (1 - 0.07), giving us a total discount percentage of 0.8193 or 81.93%.

Step 4: Calculate the discounted price.
Multiply the list price ($5000) by the total discount percentage (81.93%) to obtain the final discounted price.
$5000.00 * 0.8193 = $4096.50

Step 5: Add freight charges.
Lee agreed to prepay the $150 freight charge, so we need to add this amount to the discounted price.
$4096.50 + $150 = $4246.50

Therefore, Morgan pays Lee a total of $4246.50 on November 9.