OWNER OF GOODS

WHO SHOULD PAYWHO WILL PAY

IN TRANSIT THE FREIGHT THE FREIGHT

1 FOB SHIPPING POINT FREIGHT COLLECT BUYER BUYER BUYER

2 FOB SHIPPING POINT FREIGHT PREPAID BUYER BUYER SELLER
3 FOB DESTINATION FREIGHT COLLECT SELLER SELLER BUYER
4 FOB DESTINATION FREIGHT PREPAID SELLER SELLER SELLER

SELLING PRICE 2000

FREIGHT 100

JOURNAL ENTRY OF SELLER JOURNAL ENTRY OF BUYER

1 FOB SHIPPING POINT FREIGHT COLLECT

ACCOUNT RECEIVABLE 2000 PURCHASES 2000

SALES 2000 FREIGHT-IN who should pay 100
ACCOUNTS PAYABLE 2000
Cash who wil pay 100

2 FOB SHIPPING POINT FREIGHT PREPAID

ACCOUNT RECEIVABLE 2100 PURCHASES 2000

SALES 2000 FREIGHT-IN who should pay 100
Cash who wil pay 100 ACCOUNTS PAYABLE 2100

3 FOB DESTINATION FREIGHT COLLECT

ACCOUNT RECEIVABLE 1900 2000

FREIGHT-OUT who should pay 100 1900
SALES 2000 Cash who wil pay 100
 4 FOB DESTINATION FREIGHT PREPAID

ACCOUNT RECEIVABLE 2000 PURCHASES 2000

FREIGHT-OUT who should pay 100 ACCOUNTS PAYABLE 2000
SALES 2000
Cash who wil pay 100
TRADE DISCOUNT
COMPUTE THE INVOICE PRICE

INVOICE PRICE = LIST PRICE - TRADE DISCOUNT

LIST PRICE 1000

TD list
1 20% 200 price
2 30%, 20% 440 1000X30 %= 300 (1000-300) * 20% = 140 800
3 30%, 20%, 10% 496 1000X30 %= 300 (1000-300) * 20% = 140 560
700-140=560 560*10%= 56 504

1 1000* 80% = 800

2 1000* 70% * 80% = 560
3 1000* 70% * 80% * 90% = 504

PURCHASE DISCOUNT

PURCHASE DISCOUNT = INVOICE PRICE * DISCOUNT RATE

INVOICE PRICE 1000 invoice date January 1 amount

terms date of payment discount paid
1 n/30 January 11 0 1000
2 COD January 1 0 1000
3 2/10, n/30 January 7 2%x1000 20 980
4 2/10, n/30 January 25 0 1000
5 3/10, 2/15, 1/20, n/30 January 7 30 970
6 3/10, 2/15, 1/20, n/30 January 12 20 980
7 3/10, 2/15, 1/20, n/30 January 18 10 990
8 3/10, 2/15, 1/20, n/30 January 31 0 1000
9 3/EOM, n/60 January 18 30 970
10 3/EOM, n/60 February 2 0 1000
 11 2/10EOM February 2 20 980
12 2/10EOM February 12 0 1000

LIST PRICE 5000 6000

TD 30%, 10% 5000*70%*90%*98% = 3087 40%,30%,20%
TERMS 2/10, n/30 5/10, 3/15, 1/30, n/60
date of invoice January 1 January 1
date of payment January 10 January 13
amount paid 3087 3150-2%*3150 1955.52
invoice price 3150 5000*70%*90%=3150 2016