### Calculating Invoice Settlement Amounts with Returns and Allowances**Task:** Determine the amount to be paid in full settlement of each invoice, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.**Provided Data:**| **Merchandise** | **Freight Paid by Seller** | **Freight Terms** | **Returns and Allowances** ||:-------------------:|:--------------------------:|:--------------------------------:|:---------------------------:|| a. $11,000 | $266 | FOB Shipping Point, 1/10, net 30 | $1,100 || b. $14,000 | $65 | FOB Destination, 2/10, net 45 | $3,100 |### Steps to Determine the Settlement Amount:1. **Calculate the Net Merchandise Cost**: - Subtract the returns and allowances from the merchandise amount.2. **Apply the Discount**: - Determine the discount percentage and apply it to the net merchandise cost.3. **Settlement Amount**: - Subtract the discount amount from the net merchandise cost to get the settlement amount.### Breakdown:#### Invoice a:- **Merchandise Cost**: $11,000- **Returns and Allowances**: $1,100- **Net Merchandise Cost**: $11,000 - $1,100 = $9,900- **Discount Terms**: 1% discount if paid within 10 days (1/10, net 30)- **Discount Amount**: 1% of $9,900 = $99- **Settlement Amount**: $9,900 - $99 = $9,801#### Invoice b:- **Merchandise Cost**: $14,000- **Returns and Allowances**: $3,100- **Net Merchandise Cost**: $14,000 - $3,100 = $10,900- **Discount Terms**: 2% discount if paid within 10 days (2/10, net 45)- **Discount Amount**: 2% of $10,900 = $218- **Settlement Amount**: $10,900 - $218 = $10,682### Summary Table:| **Invoice** | **Settlement Amount** ||:

Amount paid = Purchase - Returns and allowances - Discount + Freight paid by seller (if FOB at…

Determine the amount to be paid in full settlement of each invoice, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period. Freight Paid Returns and Merchandise by Seller Freight Terms Allowances a. $11,000 $266 FOB Shipping Point, 1/10, net 30 $1,100 b. $14,000 $65 FOB Destination, 2/10, net 45 $3,100 a. %24 b.

Determine the amount to be paid in full settlement of each invoice, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period. Freight Paid Returns and Merchandise by Seller Freight Terms Allowances a. $11,000 $266 FOB Shipping Point, 1/10, net 30 $1,100 b. $14,000 $65 FOB Destination, 2/10, net 45 $3,100 a. %24 b.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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