Answer a.
A 2/10 EOM FOB means that there will be a 2% discount given to the buyer if the invoice is paid on or before the 10th day of the following month of the invoice. So as per the condition given the last date to receive the discount will be June 10th as the bill go generated in May.
FOB stands for freight on Buyer, it means that the freight is supposed to be paid by the buyer. However, as per the condition given, here the seller is paying the freight so it will be posted on the invoice as an additional charged to be paid by the buyer.
Thus,
Forest has to pay = Invoice * ( 1- discount rate ) + freight
Forest has to pay = 7000* ( 1- 2% ) + 80
Forest has to pay = $6,940 on June 8 as it is before June 10th EOM condition.
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