Merchandise subject to terms 1/10,n/30,FOB shipping point,is sold on account to a customer for $20,000.The seller paid transportation costs of $1,000 and issued a credit memorandum for $5,000 prior to payment.What is the amount of the cash discount allowable?

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The terms 1/10, n/30 mean that the customer can deduct 1% of the invoice amount if they pay within 10 days, otherwise the full amount is due in 30 days. The seller paid transportation costs of $1,000, which are not part of the invoice amount. The credit memorandum of $5,000 means the customer only owes $20,000 - $5,000 = $15,000. To determine the cash discount allowable, we need to calculate 1% of the invoice amount, which is $20,000 - $1,000 = $19,000. Therefore, the cash discount allowable is $190 ($19,000 x 1%). However, since the customer receives a credit memorandum of $5,000, they will only owe $15,000. Therefore, the cash discount allowable is $150 ($15,000 x 1%).

Merchandise Subject to Terms 1/10,n/30,FOB Shipping Point,is Sold on Account