Details of a purchase invoice and related credit memorandum are summarized as follows:
Invoice: Cost of merchandise listed on purchase invoice $5,500
Prepaid transportation charge added to invoice 100
Terms, FOB shipping point, 1/10, n/eom
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) Amount of the cash discount allowed.
(b) Amount to be paid by the purchaser if the discount is taken.
(c) Cost of the 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 show full credit will NOT be awarded for this problem.