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GCE Financial Accounting 1990 Question 46

Question 46

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. failed to settle his account in time, the amount due from him would be

  1. A.₦13,200
  2. B.₦12,000
  3. C.₦10,800
  4. D.₦10,200
  5. E.₦9,180.
Show the answer and explanation

Answer: D (₦10,200)

Explanation

He loses the cash discount but keeps the trade discount: 12,000 − 1,800 = ₦10,200.