(a) Write in full the following abbreviations as used in commerce:
(i) COD (ii) CIF (iii) FOB; (iv) E and O.E.
(b) The sale of consumer goods costing N 100,000 attracts a cash discount of 7½% and a quantity discount of 5%. Calculate the:
(i) value of the quantity discount
(ii) value of the cash discount
(iii) net amount of money payable by the buyer.
Explanation
(a) FULL MEANING OF ABBREVIATIONS USED IN COMMERCE
(i) C.O.D. = Cash on Delivery
(ii) = Cost, Insurance and Freight
(iii) F.O.B. = Free on Board
(iv) E and O.E. = Errors and Omissions Excepted.
(b) CALCULATIONS
(i) Calculation of Quantity Discount Cost of goods = N100,000 Quantity discount (5%) = 5/100 * 100,00 100 = N5,000
(ii) Calculation of Cash Discount Cash payable N100,000 - N5,000 = N95,000 Cash discount (7½%) = 7½/100 #95000 = 15/200 * 95000 = N7,125
(iii) Calculation of net amount payable Cost of goods 10,000 Less quantity discount 5,000 Net amount payable N95,000 Less the cash discount N7,125 Net Amount payable N87,875