JAMB Commerce 2001 Question 21

Question 21

Purchase and Sale of Goods

Use 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.
If Mr. Bacus fulfils his promise, he will be entitled to a cash discount of

  1. A.₦2,760
  2. B.₦3,000
  3. C.₦6,500
  4. D.₦9,500.
Show the answer and explanation

Answer: A (₦2,760)

Explanation

150,000 − 7,500 = 142,500; less 3% quantity discount (4,275) = 138,225. Cash discount 2% = 2,764.50 ≈ ₦2,760.