The Discount That Excludes Freight
Document A - Invoice #4471, Northline Office Supply, dated March 3 12 ergonomic chairs @ $210.00 = $2,520.00 6 desk lamps @ $45.00 = $270.00 Freight = $130.00 Invoice total = $2,920.00 Terms: net 30. A 3% discount applies if payment is received within 10 days of the invoice date.
Document B - Email from the purchasing manager, March 5 "We're remitting invoice #4471 this week. Two of the chairs arrived with cracked armrests and are going back, so please issue a credit for those before we remit. We do qualify for the early-payment discount - but calculate it on merchandise only. Freight is not discountable under our contract with Northline."
1. If payment is sent on March 12, what exact amount should be remitted? Show the arithmetic.
Read the worked answer
$2,428.90
- Discount window: March 3 + 10 days = March 13. March 12 clears it by one day.
- Chairs after removing 2: 10 × $210 = $2,100.00
- Lamps: 6 × $45 = $270.00
- Discountable merchandise: $2,370.00
- 3% discount: $2,370.00 × 0.03 = $71.10 → merchandise net $2,298.90
- Freight, undiscounted: +$130.00
- Total: $2,428.90
Trap to avoid: Applying 3% to the $2,920 invoice total, which wrongly discounts freight and the two returned chairs.
2. How does the amount change if payment slips to March 20?
Read the worked answer
It rises to $2,500.00.
- March 20 is past the March 13 cutoff, so no discount applies at all - the manager's instruction about merchandise-only becomes irrelevant.
- Chairs (10 × $210) $2,100.00 + lamps $270.00 + freight $130.00 = $2,500.00.
Point of judgment: The freight question is a conditional rule. It only bites when the discount is actually available; a careless answer applies it to both dates.
3. Which document controls whether the two chairs are deducted, and what does the email add that the invoice cannot show?
Read the worked answer
The email controls the deduction; the invoice shows only what was billed.
- The invoice has no knowledge of the cracked armrests - it is a March 3 snapshot. The return is asserted only in the March 5 email, and the manager ties the credit to remittance ("please issue a credit for those before we remit").
- The email also supplies a contract term - freight is not discountable - that appears nowhere on the invoice, whose discount clause is silent on what the 3% applies to.
Trap to avoid: Assuming the invoice's "3% discount" clause is complete. The two documents must be read together, and where the invoice is silent, the email governs.