XO company sold merchandise on account to Brandy company, $14000 , terms FOB shipping point, 2/10, n/30. XO company paid transportation costs of $350, which were added to the invoice. The cost of the merchandise sold was $8000
Feyisa
To help you understand the steps involved, let's break down the transaction:
1. Merchandise Sold on Account:
- Brandy company purchased merchandise from XO company for $14,000.
2. Terms and Conditions:
- The terms for the transaction are FOB shipping point, 2/10, n/30.
- FOB Shipping Point: Indicates that the buyer (Brandy company) assumes ownership of the goods once they are shipped by XO company.
- 2/10: Offers a 2% discount if the payment is made within 10 days.
- n/30: Specifies that the payment should be made within 30 days.
3. Transportation Costs:
- XO company pays $350 for transporting the merchandise, which is added to the invoice.
4. Cost of Merchandise:
- The cost of the merchandise sold by XO company to Brandy company is $8,000.
These are the main details of the transaction. Let me know if you would like to proceed with further calculations or if you have any specific questions.
To calculate the net amount payable by Brandy Company to XO Company, we need to take into account the terms of the sale and any additional charges.
1. Calculate the amount after the trade discount:
The terms "2/10, n/30" mean that Brandy Company is eligible for a 2% cash discount if payment is made within 10 days. If not, the full amount is due within 30 days. Let's calculate the amount after the trade discount:
Amount after trade discount = $14,000 - (2% * $14,000)
2. Calculate the amount after the transportation costs:
The transportation costs of $350 were added to the invoice. So, we need to add this amount to the total.
Total amount with transportation costs = Amount after trade discount + $350
3. Calculate the net amount payable:
The net amount payable is the total amount after deducting the trade discount and including the transportation costs. This amount is due within the credit period (either within 10 days with the discount or within 30 days without the discount).
Net amount payable = Total amount with transportation costs
Now let's calculate each step:
1. Calculate the amount after the trade discount:
Amount after trade discount = $14,000 - (2% * $14,000)
= $14,000 - ($280)
= $13,720
2. Calculate the amount after the transportation costs:
Total amount with transportation costs = $13,720 + $350
= $14,070
3. Calculate the net amount payable:
Net amount payable = Total amount with transportation costs
= $14,070
Therefore, the net amount payable by Brandy Company to XO Company is $14,070.