(a) Write the following commercial abbreviations in full:
(i) C.OD (ii) C.I.F (iv) E & O.E
(b) The sale of a good costing Le100,000 attracts a trade discount of 5% and a cash discount of 5%. You are required to calculate the:
(i) trade discount value
(ii) cash discount value
(iii) net amount payable by the buyer.
Explanation
(i) C.O.D. Cash on Delivery
(ii) C.1.F Cost, Insurance and Freight
(iii) FOB. Free on Board
(iv) E and 0. E. Errors and Omissions Excepted
b (i) Calculate Trade Discount (5% of cost of goods)
Cost of goods = Le 100,000
Trade Discount Value 5/100 x 100,000
Le 5,000.00 (ii) Calculation of cash Discount Cash payable = Le 100,000 – Le 5,000 = Le 95,000 Cash Discount (5%) = 5/100 x 95,000 = Le 4,750.00
Calculation of Net amount payable Cost of goods Le 100,000 Less trade discount Le5,000 Gross amount payable Le 95,000 Less cash Discount Le4.750 Net amount payable Le 90,250