(a) Write in full the following abbreviations as... | WAEC SSCE - Commerce - 2015 (Essay)

Question 1 Report

(a) Write in full the following abbreviations as used in commerce:

(i) COD (ii) CIF (iii) FOB; (iv) E and O.E.

(b) The sale of consumer goods costing N 100,000 attracts a cash discount of 7½% and a quantity discount of 5%. Calculate the:

(i) value of the quantity discount

(ii) value of the cash discount

(iii) net amount of money payable by the buyer.

Answer

(a) The abbreviations in full

(b) Calculation

Cost of goods = N100,000. Trade practice is to deduct the quantity (trade) discount first, then calculate the cash discount on the reduced amount.

(i) Value of the quantity discount

\[ \text{Quantity discount} = 5\% \times N100{,}000 = \frac{5}{100} \times 100{,}000 = N5{,}000 \]

(ii) Value of the cash discount

Amount after quantity discount \(= 100{,}000 - 5{,}000 = N95{,}000\).

\[ \text{Cash discount} = 7\tfrac{1}{2}\% \times N95{,}000 = \frac{7.5}{100} \times 95{,}000 = N7{,}125 \]

(iii) Net amount payable by the buyer

\[ \text{Net amount} = 100{,}000 - 5{,}000 - 7{,}125 = N87{,}875 \]

The buyer therefore pays N87,875.

Answer Details