Question 20
Purchase and Sale of GoodsUse the information below to answer questions 20 and 21.
Mr. Awala is a retailer of a single product. He sells at the standard price. He gives a trade discount of 5%, quantity discount of 3% for a volume above 1000 units and a cash discount of 2/10 net 30. the existing selling price of the product is ₦100 per unit. Mr. Bacus purchased 1500 units of the product on credit and promised to pay Mr. Awala in cash in the first 10 days after purchase.
The trade discount receivable by Mr. Bacus is
- A.₦4,500
- B.₦7,500
- C.₦10,500
- D.₦12,000.
Show the answer and explanation
Answer: B (₦7,500)
Explanation
Trade discount = 5% × (1,500 × ₦100) = 5% × 150,000 = ₦7,500.