Problem 2.

Details of a purchase invoice and related credit memo are summarized as follows: Invoice: Cost of merchandise listed on purchase invoice $6,500 Prepaid freight charge added to invoice 150 Terms, FOB shipping point, 1/10, n/eom Credit memo: Cost of merchandise returned $1,500 Assume that the credit memo 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. $___________________ Show your work:

(b) Amount to be paid by the purchaser if the discount is taken. $_________________ Show your work:

(c) Cost of the merchandise to the purchaser if the discount is NOT taken. $________________