Details of a Purchase Invoice and Related Credit Memo Are

Essay

Details of a purchase invoice and related credit memo are summarized as follows:
$\begin{array}{llcc} \text { Invoice: } & \text { Cost of merchandise listed on purchase invoice } &\$ 6,500 \\& \text { Prepaid freight charge added to invoice } & 150 \\& \text { Terms, FOB shipping point, 1 / 10, n/ eom } & \\\\ \text { Credit memo: } & \text {Cost of merchandise returned } &\$ 1,500 \\\end{array}$
Assume that the credit memo was received prior to payment and that the invoice is paid within the discount period.Determine the following:
a Amount of the cash discount allowed.
b Amount to be paid by the purchaser if the discount is taken.
c Cost of the merchandise to the purchaser if the discount is not taken.