Tod's Furniture buys a living room set with a $4000 list price and a 55% trade discount. Freight (FOB shipping point) of $50 is not part of the list price. What is the delivered price(including freight) of the living room set , assuming a cash discount of 2/10,n/30,ROG? The invoice had an April 8 date. Tod received the goods on April 19 and paid the invoice on April 25.
To calculate the delivered price of the living room set, we need to consider the trade discount, freight, and cash discount. Let's break it down step by step:
1. Trade Discount:
The trade discount is given as 55%. To calculate the trade discount, multiply the list price by the trade discount rate:
Trade Discount = List Price x Trade Discount Rate
Trade Discount = $4000 x 0.55
Trade Discount = $2200
2. Net Price:
The net price is the price after deducting the trade discount from the list price:
Net Price = List Price - Trade Discount
Net Price = $4000 - $2200
Net Price = $1800
3. Freight:
The freight cost is mentioned as $50 and is not part of the list price. Therefore, the delivered price should include the freight cost:
Delivered Price = Net Price + Freight
Delivered Price = $1800 + $50
Delivered Price = $1850
4. Cash Discount:
The given cash discount terms are 2/10, n/30, ROG. This means that a 2% discount is offered if paid within 10 days; otherwise, the full amount is due within 30 days from the receipt of goods (ROG).
Since Tod received the goods on April 19 and paid the invoice on April 25, it falls within the discount period:
Discount Amount = Delivered Price x Cash Discount Rate
Discount Amount = $1850 x 0.02
Discount Amount = $37
Amount Due = Delivered Price - Discount Amount
Amount Due = $1850 - $37
Amount Due = $1813
Therefore, the delivered price of the living room set, including freight and considering the cash discount, is $1813.