Jimmie Jones purchases merchandise from GPS Industries for $15,500 on account. The terms were FOB Destination with freight costs of $100. Upon inspection of the merchandise received, Jimmie Jones discovers damaged goods in the amount of $2,500 and requests to return the damaged merchandise to GPS Industries. Once the return is processed, what is the new balance owed by Jimmie Jones?

Question

Quizplus · Accepted Answer

The original purchase was $15,500. After returning the damaged goods worth $2,500, the balance owed is $15,500 - $2,500 = $13,000. The freight cost does not affect the balance owed as it is FOB Destination, meaning GPS Industries covers the freight cost.

Jimmie Jones Purchases Merchandise from GPS Industries for $15,500 on Account