From the following items purchased from Ndalempan Merchants Ltd, prepare an invoice to Osseh Builders Ltd Jan. 8, 2014 , 200 buckets at D 100 each 350 bags ...

An invoice is the source document a seller sends to a buyer for goods sold on credit. It lists the quantity, description and unit price of each item, extends each line to an amount, totals the goods, and then deducts any trade discount. A trade discount is a reduction in the catalogue price that a supplier allows to another trader, calculated as a percentage of the gross value of the goods; it is shown on the invoice and never appears in the ledger accounts, because the buyer records only the net amount actually charged.

To build the invoice, each line amount is the unit price multiplied by the quantity, with the units kept consistent. The boots need one conversion because they are priced per dozen: \( 120 \text{ boots} \div 12 = 10 \text{ dozen} \), so the charge is \( 10 \times D1{,}200 = D12{,}000 \).

INVOICE

Seller: Ndalempan Merchants Ltd
Buyer: Osseh Builders Ltd
Date: January 8, 2014

Line-by-line working

• Buckets: \( 200 \times D100 = D20{,}000 \)
• Cement: \( 350 \times D300 = D105{,}000 \)
• Electrical wire: \( 50 \times D80 = D4{,}000 \)
• Boots: \( \dfrac{120}{12} \times D1{,}200 = 10 \times D1{,}200 = D12{,}000 \)
• Nails: \( 55 \times D500 = D27{,}500 \)

Totals

\[ \text{Gross total} = 20{,}000 + 105{,}000 + 4{,}000 + 12{,}000 + 27{,}500 = D168{,}500 \]

\[ \text{Trade discount} = \frac{10}{100} \times 168{,}500 = D16{,}850 \]

\[ \text{Net amount payable} = 168{,}500 - 16{,}850 = D151{,}650 \]

The buyer, Osseh Builders Ltd, therefore owes D151,650. Remember that the trade discount is worked out on the gross total of the goods, not on any single line, and that only this net figure is entered in the books of both trader. The note E & O.E (errors and omissions excepted) is conventionally added so the seller may correct any arithmetical slip later.