Question

Macy of New York sold LeeCo. of Chicago office equipment with a $5,500 list price. Sale terms were 4/10, n/30 FOB New York. Macy agreed to prepay the $70 freight. LeeCo. pays the invoice within the discount period. What does LeeCo. pay Macy?

Answer 1

$5,350

Step-by-step explanation:

LeeCo's total invoice = $5,500 (Macy's goods)+ $70 for freight charges (FOB sale New York)

If LeeCo. pays within the discount period it must pay $5,500 x 96% = $5,280 for the goods and $70 for the freight = $5,350

*Free on board (FOB) shipping point means that the buyer gets title of the goods at the moment they are shipped and is responsible for covering freight expenses.