### Invoice Payment CalculationDetermine the amount to be paid in full settlement of each invoice, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.#### Data Table:| Item | Merchandise | Freight Paid by Seller | Freight Terms | Returns and Allowances ||------|-------------|------------------------|------------------------------------|------------------------|| a. | $10,700 | $376 | FOB Shipping Point, 1/10, net 30 | $1,100 || b. | $13,300 | $58 | FOB Destination, 2/10, net 45 | $2,900 |#### Input Boxes:- a. $ [ ]- b. $ [ ]#### Explanation:- **FOB Shipping Point**: Buyer pays shipping costs; ownership transfers at shipping point.- **FOB Destination**: Seller pays shipping costs; ownership transfers at destination.- **1/10, net 30**: 1% discount if paid within 10 days; entire amount due in 30 days.- **2/10, net 45**: 2% discount if paid within 10 days; entire amount due in 45 days.Calculate the final payment by applying discounts after accounting for returns and freight.

Lets understand the basics.Under FOB destination, freight is the seller's expense and under the FOB shipping point, shipping charges are the responsibility of the purchaser.This is because in FOB destination mode, ownership gets transferred only when it reaches to buyer and in FOB shipping point mode, ownership gets transferred when it is reaches to port of seller.a. Amount to be paid = (Purchases - purchase return) x (1 - discount rate) + Freight paid by the seller= ($10,700- 1,100) x (1 - 0.01) + 376= $9,880b.Amount to be paid = (Purchases - purchase return) x (1 - discount rate)= ($13,300 - 2,900) x (1 - 0.02)= $10,400 x 0.98= $10,192Therefore,(A) $9,880(B) $10,192

Answered: a. b. Merchandise $10,700 $13,300 a. $…

Business

Accounting

a. b. Merchandise $10,700 $13,300 a. $ b. $ Freight Paid by Seller $376 $58 Freight Terms FOB Shipping Point, 1/10, net 30 FOB Destination, 2/10, net 45 Returns and Allowances $1,100 $2,900

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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