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Levin Furniture buys a living room set with a $4,000 list price and a 55% trade discount. Freight (FOB shipping point) of $50 is not part of the list price. The invoice had an April 8 date. Levin received the goods on April 19 and paid the invoice on April 25. Assume a cash discount of 2/10, n/30, ROG.
What is the delivered price (including freight) of the living room set?
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$4000 * 0.55 = $2200 => discount
$4000 – $2200 = $1800
April 19 to April 25=> elapsed time from received day to making payment
25 - 19 = 6 days => payment in 6 days
2/10 or 20% discount for paying before 10 days i.e. 6 days:
$1800 * 0.2 = $360
$1800 – $360 = $1440 => price before delivery
$1440 + $50 = $1490 => delivered price
Edit: if the $50 delivery charges also entitled to 20% discount, then:
$1850 * 0.2 = $370
$1850 - $370 = $1480 => delivered price