(a) Write the following abbreviations in full: (i) C.O.D; (ii) C.I.F. (iii) F.O.B; (iv) E...
(a) Write the following abbreviations in full:
(i) C.O.D; (ii) C.I.F. (iii) F.O.B; (iv) E and O.E.
(b) The sale of a consumer good costing #100,000 attracts a cash discount of 5% and a quantity discount of 5%. You are required to calculate
(1) quantity discount value (ii) cash discount value (iii) net amount of money payable by the customer.
Explanation
a. Full meaning of the following abbreviations:
(i) C.O.D. = Cash on delivery
(ii) C.I.F. = Cost, Insurance and Freight
(iii) F.O.B. = Free on Board
(iv) E& 0, E = Errors and Omissions Excepted.
b(i) Quantity discount = Quantity discount value x gross sale = 5/100 x 100,000 = N5,000.
(ii)Cash discount value = Cash discount value x gross sales value less quantity discount value
Gross sales value less quantity discount value = 10(100,000 - 5,000) = #95,000
Cash discount value = (5/100 x 95,000) = #4,750
(iii) Net amount of money payable by the customer = gross sales value - quantity;
discount value - cash; discount value = #(100,000 - 5,000 - 4,750) = #90,250