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GCE Financial Accounting 1990 Question 44

Question 44

Cash Book

Date of delivery: 4/1/86; Customer: Mr. A.F.P.; Gross Amount: ₦12,000; Trade Discount: 15%; Cash Discount: 10%; Terms of Payment: 30 days of delivery

If Mr. A.F.P. settled his account a week after delivery, his total discount would be

  1. A.₦10,200
  2. B.₦2,820
  3. C.₦1,800
  4. D.₦1,200
  5. E.₦10,020.
Show the answer and explanation

Answer: B (₦2,820)

Explanation

Trade discount 15% × 12,000 = 1,800; cash discount 10% × 10,200 = 1,020; total ₦2,820.