2016 · Q39
A firm is purchasing two items, both on credit on the same day. The credit term offered for the first item is 2.5 /10, 1/20, net 30; and the credit term offered for the second for the second item is 3/5, 2/15, net 30. The declared purchase cost of item 1 is Rs 60,000 and that of item 2 is Rs 1, 40,000. If both credits can be paid 14 days after the purchase, what is the total amount to be paid out?
General Accounting Principles, Auditing and InsuranceRecording transactions
- ARs. 1, 97,200
- BRs. 1, 97,500
- CRs. 1, 96,600
- DRs. 1, 98,400
Explanation
Paid on day 14, item 1 (₹60,000) qualifies for the 1%-within-20-days discount: ₹60,000 × 0.99 = ₹59,400. Item 2 (₹1,40,000) qualifies for the 2%-within-15-days discount: ₹1,40,000 × 0.98 = ₹1,37,200. Total payable = ₹59,400 + ₹1,37,200 = ₹1,96,600. Hence (C).