Question

Mel’s Furniture received an invoice dated September 27

for five bedroom sets at $3,000 each. The invoice indicated
a trade discount of 5/8/3. The seller of the furniture
prepaid the freight of $200. Terms were 2/10 EOM.
Assuming Mel pays on November 2, what amount would
be paid? (Be sure to include the freight cost.)

Answer 1

[AI-generated answer — Explain Bot]

To calculate the amount Mel would pay, we need to break down the given information step by step.

1. Calculate the total cost of the bedroom sets:
Mel's Furniture received an invoice for five bedroom sets at $3,000 each. So the total cost of the bedroom sets before any discounts or freight charges is:
Total Cost = (Number of bedroom sets) x (Cost per bedroom set)
Total Cost = 5 x $3,000
Total Cost = $15,000

2. Calculate the trade discount:
The trade discount is given as 5/8/3. This means there are three tiers of discounts: 5%, 8%, and 3%.

First, calculate the first tier discount of 5%:
Discount Tier 1 = (5/100) x Total Cost
Discount Tier 1 = (5/100) x $15,000
Discount Tier 1 = $750

Next, calculate the second tier discount of 8%:
Discount Tier 2 = (8/100) x (Total Cost - Discount Tier 1)
Discount Tier 2 = (8/100) x ($15,000 - $750)
Discount Tier 2 = $1,140

Finally, calculate the third tier discount of 3%:
Discount Tier 3 = (3/100) x (Total Cost - (Discount Tier 1 + Discount Tier 2))
Discount Tier 3 = (3/100) x ($15,000 - ($750 + $1,140))
Discount Tier 3 = $315

3. Calculate the total discount:
The total discount is the sum of all three discount tiers:
Total Discount = Discount Tier 1 + Discount Tier 2 + Discount Tier 3
Total Discount = $750 + $1,140 + $315
Total Discount = $2,205

4. Subtract the total discount from the total cost of the bedroom sets to get the discounted price:
Discounted Price = Total Cost - Total Discount
Discounted Price = $15,000 - $2,205
Discounted Price = $12,795

5. Add the freight cost of $200:
Total Amount to be paid = Discounted Price + Freight Cost
Total Amount to be paid = $12,795 + $200
Total Amount to be paid = $12,995

6. Calculate the payment due after the discount terms:
Mel has terms of 2/10 EOM, which means they get a 2% discount if paid within 10 days, and the payment is due at the end of the month (EOM).

If Mel pays on November 2, they are not eligible for the 2% discount. Therefore, the payment amount would be the total amount to be paid:
Payment Amount = Total Amount to be paid
Payment Amount = $12,995

Therefore, Mel would need to pay $12,995 on November 2, including the freight cost.