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WAEC SSCE - Financial Accounting - 1990 (Objective)

Question 1 Report

Use the following information to answer the given question:
\(\begin{array}{c|c} \text{Date of delivery} & customer & \text{Gross amount N} & \text{Trade discount %} & \text{Cash Discount %} & \text{Terms of payment} \\ \hline \text{4/1/86} & \text{Mr. A.F.P} & 12,000 & 15 & 10 & \text{30 days of delivery}
\end{array}\)
If Mr. A.F.P. settled his account after 30 days of the delivery, his total discount would be
Answer Details
The gross amount of the transaction is N12,000, and the trade discount is 15%. This means that the customer, Mr. A.F.P., is entitled to a discount of N1,800 (15% of N12,000). The terms of payment state that Mr. A.F.P. has 30 days to settle his account, and if he does so, he will also receive a cash discount of 10%. This means that he will receive a discount of N1,200 (10% of N12,000). Therefore, if Mr. A.F.P. settled his account after 30 days of delivery, he would receive a total discount of N3,000 (N1,800 + N1,200). This is, N10,800. In summary, Mr. A.F.P. would receive a trade discount of N1,800 and a cash discount of N1,200, totaling a discount of N3,000 if he settles his account after 30 days of delivery.
Read lesson note on Cashbook (JAMB)
Read lesson note on Nature And Significance Of Accounting (JAMB)
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