I am trying to figure this out. I know I am not right. I was looking for some help on how to get the proper answer.

Morgan Company received from Lee Company an invoice dated September 27. Terms were 2/10 EOM. List price on the invoice was $5,000 (freight not included). Morgan receives a 9/7 chain discount. Freight charges are Morgan’s responsibility but Lee agreed to prepay the $150 freight charge. Morgan pays the invoice November 9. What does Morgan pay Lee?

Here is my answer:

So I know because he pays on the 9th he gets a 2% discount.

Which now brings the list price from $5,000 to $4,900

This is the part where I am confused 9/7 discount.So when I convert it to a percent it is 1.29%..Is this right.

So I think i take $4,900 - 1.29% so then ($63.21)<--So this would be the dollar amount I subtract from $4,900
= $4,836.79.

I am not sure if I subtract or add $150.00.

Can anyone help me?

2/10 Discount (considering Morgan payed before the 10 day period)

Discount: $5,000 * 2/10 = $100 (deducted)

= Net Price: $4,900
Chain Discount (9/7)
= $4900 * .09 = $441 --> $4900-$441= $4459 --> $4459 * .07 = $312.13 --> $4459- $312.13 = $4146.87
Add Freight Charge of $150
$4146.87 +$150
= $4296.87

Beginning price $5000. Terms are 2/10 End of Month. Paying on the 9th (before the 10th day of the month) triggers the 2% discount. $100 off.

New price $4900. Chain discounts apply. 4900 * 0.91 * 0.93 = $4146.87
Add in the $150 that Morgan agreed to repay for the shipping, the the final invoice price is $4316.87

Invoice dated september 27 Morgan pay invoice November 9 therefore the 2% discount expired.

5000x.09=450. 5000-450=4550. 4550x.07=318.50 4550-3180.50=4231.50+ 150=4381.20

To calculate the amount that Morgan Company pays Lee Company, we need to follow these steps:

Step 1: Calculate the net price after the 9/7 chain discount.
The 9/7 chain discount means that there are two discounts applied consecutively. To calculate the net price after the discount, subtract each discount amount from the preceding price.
Start with the list price of $5,000. The first discount of 9% would be calculated as follows:
$5,000 - (9% * $5,000) = $5,000 - $450 = $4,550
Next, apply the second discount of 7% on the new price:
$4,550 - (7% * $4,550) = $4,550 - $318.50 = $4,231.50

So the net price after the 9/7 chain discount is $4,231.50.

Step 2: Apply the 2/10 EOM discount.
Since Morgan pays on November 9, they are eligible for a 2% discount for paying within 10 days. However, the 10-day period starts from the end of the month, in this case, the end of September. So we need to consider how many days between September 27 and November 9 fall within the 10-day period.
Count the days: September 27 to September 30 = 3 days, plus all of October (31 days) = 34 + 9 days in November (including the 9th) = 43 days.
If the payment is made within 10 days, Morgan is eligible for the discount; otherwise, they pay the full net price.
Since the payment falls within the 43-day period, Morgan is eligible for the 2% discount on the net price of $4,231.50.

To calculate the discount:
2% * $4,231.50 = $84.63

Step 3: Add freight charges.
Lee agreed to prepay the $150 freight charge, which means Morgan needs to reimburse Lee for that amount.

Step 4: Calculate the final payment.
To calculate the final payment, subtract the discount amount from the net price and add the freight charges.
$4,231.50 - $84.63 + $150 = $4,296.87

So Morgan Company pays Lee Company $4,296.87.

I hope this explanation helps! Let me know if there's anything else I can assist you with.