Morgan Company received from Lee Company an invoice dated September 27. Terms were 2/10 EOM. List price on the invoice was $5,000 (freight not included). Morgan receives a 9/7 chain discount. Freight charges are Morgan's responsibility, but Lee agreed to prepay the $150 freight charge. Morgan pays the invoice on November 9. What does Morgan pay Lee?

Question

Quizplus · Accepted Answer

Multiply the complements of the chain discount rates, .93 times .91, to get .8463. Take this rate times the invoice amount of $5,000 to get $4,231.50. Multiply this by .98, the complement of the 2% discount rate to get an adjusted amount due of $4,146.87 and add the $150 freight.

Morgan Company Received from Lee Company an Invoice Dated September