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