Commerce WASSCE (SC), 2017

Question 8

  • Write the following commercial abbreviations in full:
  • C.O.D.;
  • C.I.F.;
  • F.O.B.;
  • E&O.E.
  •  

  • The sale of a good costing Le100,000 attracts a trade discount of 5% and a cash discount of 5%.
  • You are required to calculate the:

  • trade discount;
  • cash discount;
  • net amount payable by the buyer

                                                                                                                                                   

     

     

     

    Observation

    Many candidates did not attempt this question. The once that did performed well in part a. but  failed part b.

    The expected responses are:

    8a.       (i)         C.O.D.            Cash on Delivery
    (ii)        C.I.F.               Cost, Insurance and Freight
    (iii)       F.O.B.             Free on Board

    1. E and O.E.      Errors and Omissions Excepted

     

    237

     

                8b.       (i)         Calculation of Trade Discount:

                                        5% of Cost of goods =  5/100 x 100,000/1
    = Le 5,000

                            (ii)        Calculation of Cash Discount:

                                        Cash payable               =          Le 100,000 – Le 5,000 = Le 95,000
    Cash Discount (5%)    =          5/100 x 95,000/1
    =          Le 4,750

    (iii)       Calculation of Net amount payable:

                Cost of goods                         Le 100,000
    Less trade discount                 Le     5,000                 
    Gross amount payable             Le   95,000
    Less cash discount                  Le     4,750
    Net amount payable                Le   90,250