IN A NUTSHELL

YOUR TURN

Activity 29. Transactions for a merchandising concern is quite challenging compared with the service
concern. Aside from the terms, that you are going to master, you have to do some computations
because of freight terms, discounts and transportation arrangement that applicable to a merchandising
concern. In this activity, you are going to determine the amount to be paid or collected as may be the
case, applying the freight terms, discounts and transportation arrangement.

Legend: MDSE (means merchandise)

Transportation Freight Terms Credit Terms Amount Transportation Returned Amount to be

Arrangement Costs MDSE paid/collected
(roundoff to
nearest peso)
1. FOB Destination Freight Prepaid 2/10, n/30 less: 10% 180,000 6,000 10,000 P149,940

2. FOB Shipping Point Freight Collect 2/10, n/20 120,000 4,000 12,000 P109,840

3. FOB Destination Freight Collect COD 60,000 2,500 -0- P57,500

4. FOB Shipping Point Freight Prepaid 2/15, n/30 70,000 3,500 8,000 P64,260

5. FOB Destination Freight Collect 2/10, n/30 less: 8% 150,000 5,500 12,000 P118,921

6. FOB Shipping Point Freight Prepaid COD 20,000 1,000 -0- P21,000

7. FOB Destination Freight Prepaid 2/5, n/20 40,000 2,000 4,000 P35,280

8. FOB Shipping Point Freight Collect 2/10, n/30 30,000 1,500 7,000 P24,040

9. FOB Destination Freight Prepaid COD, less: 5% 75,000 4,500 -0- P71,250

10. FOB Shipping Point Freight Collect COD 10,000 1,000 -0- P11,000