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Commerce Paper 2, May/June 2008  
Questions: 1 2 3 4 5 6 7 8 9 10 Main
General Comments
Strength
Weakness/Remedies




























Question 10

      (a) Write the following abbreviations in full:

      (I) C.O. D. = Cash on delivery
      (II) C. I. F. = Cost Insurance and Freight
      (III) F. O. B. = Free on board
      (IV) E and O. E. = Error and Omissions Excepted

      (b) The sale of a consumer good costing N=100,000 attracts a cash discount of 5% and a quantity discount of 5%. You are required to calculate:
      (I) quantity discount value
      (II) cash discount value
      (III) net amount of money payable by the customer.

_____________________________________________________________________________________________________

Observation

(I) Quantity discount = Quantity discount
Value x gross sales
5/100 x 100000 = N=5000

(II) Cash discount Cash discount value x gross sales value less quantity discount value
Gross Sales value less quantity discount
Value = N=(100,000 – 5000 = N=95000
Cash discount value = (5/100 x 95000)
= N=4750

(III) Net amount of money payable
by Customer = gross sales value - Qty
discount value - cash
discount value
= N=(100,000 – 5000 – 4750)
= N=90,250

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