Merchandise subject to terms 2/10, n/30, FOB shipping point, is sold on account to a customer for $25,000. What is the amount of the sales discount allowable?

A) $260
B) $500
C) $460
D) $150

Question

Merchandise subject to terms 2/10, n/30, FOB shipping point, is sold on account to a customer for $25,000. What is the amount of the sales discount allowable?A)  $260B)  $500C)  $460D)  $150

Paige Spruill · Accepted Answer

Final Answer : B, Explanation :  2/10, n/30 means that the customer can take a 2% discount if the amount is paid within 10 days, otherwise the full amount is due within 30 days. FOB shipping point means that the buyer is responsible for shipping costs from the point of shipment. Therefore, if the customer pays within 10 days, they can take a discount of 2%*$25,000 = $500.

Merchandise subject to terms 2/10, n/30, FOB shipping point, is sold on account to a customer for $25,000. What is the amount of the sales discount allowable?

A) $260
B) $500
C) $460
D) $150

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