If merchandise costing $3,500, terms FOB destination, 2/10, n/30, with prepaid freight costs of $125, is paid within 10 days, the amount of the purchase discount is $70. This statement is true.
Given,
Merchandise cost = $3,500
terms = FOB destination, 2/10, n/30, with prepaid freight costs of $125
Paid within 10 days.
Since the merchandise is paid for within the time limit of 30 days.
A discount is allowed when payment is made for the merchandise of 2%.
Therefore, purchase discount = 2% of $3,500
= $70
Also, The seller records the freight cost he or she paid as an expense.
Because ownership of the goods has not yet been given to the buyer, the buyer is not required to reimburse the freight costs.
When an item is delivered FOB destination, ownership is transferred from the seller to the buyer at the time the package reaches the intended location or the address of the buyer.
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