Question 1 [20 marks]

(a) Sam’s Department Store sells a shirt with discounts of 12 percent and 20 percent, while

Alan’s Department Store sells the same type of shirt with discounts of 10 percent, 10

percent and 12 percent.

(i) Determine which store offers a higher discount.

(5 Marks)

(ii) If the list price of the shirt is $89, calculate the net price of that shirt in Sam’s

Department Store.

(3 Marks)

(b) Farid, a furniture shop owner, buys a new set of furniture worth $9,450. He receives an

invoice dated 26 October 2009 with trade discounts of 9 percent, 3 percent and is offered

cash discount terms 3/15, 2/30, n/60.

(i) Calculate the single discount equivalent to the trade discounts given.

(4 Marks)

(ii) Determine the total amount due if Farid pays the invoice on 17 November 2009.

(4 Marks)

(iii) If Farid pays $5,440 on 3 November 2009, calculate the amount that was credited

to Farid’s account.

**EXPERT ANSWER**