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Details of a purchase invoice and related credit memorandum are summarized as follows: Invoice: Cost of merchandise $5,000 Prepaid transportation charge added to invoice: $100 Terms, FOB Shipping Point, 1/10, n/30 Credit Memo: Cost of merchandise returned $1,500 Assume that the credit memorandum was received prior to payment and that the invoice is paid within the discount period. Determine the following: (a) Dollar amount of the cash discount allowed. (b) Amount to be paid by the purchaser if the discount is taken. (c) Cost of their merchandise to the purchaser if the discount is not taken. Be sure to label each answer clearly and show all work. If work is not shown, full credit will not be awarded for this problem.
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