On June 05, Talbots of Boston sold Forrest of Los Angeles $8,100 of fine clothes. Terms were  210
  EOM FOB Boston. Talbots agreed to prepay the $80 freight.

If Forrest pays the invoice on June 8, what will Forrest pay?



If Forrest pays on July 20, what will Forrest pay?



To solve the problem, let's break down the terms and the timeline:

### Understanding the Terms:
- **2/10 EOM (End of Month):** This means that Forrest can take a 2% discount if the invoice is paid within 10 days from the end of the month (EOM) in which the purchase was made. Otherwise, the full amount is due.
- **FOB Boston:** "Free on Board" Boston means that the buyer (Forrest) takes ownership of the goods as soon as they are shipped from Boston. Talbots prepaid the $80 freight, so Forrest needs to reimburse Talbots for that cost.

### Part 1: Payment on June 8
- **Invoice Date:** June 5
- **Freight:** $80 (prepaid by Talbots)
- **Total Invoice Amount:** $8,100
- **Payment Date:** June 8

Since June 8 is within the same month as the purchase, Forrest pays within the discount period if we consider the discount terms starting from the end of the month (EOM). But for simplicity and typical retail practice, we consider it as within 10 days of the invoice, which makes Forrest eligible for the 2% discount on the purchase.

**Discount Calculation:**
- 2% of $8,100 = $8,100 × 0.02 = $162

**Amount after Discount:**
- $8,100 - $162 = $7,938

**Total Amount to Pay:**
- $7,938 + $80 (freight) = $8,018

So, if Forrest pays on June 8, **Forrest will pay $8,018**.

### Part 2: Payment on July 20
- **Payment Date:** July 20
- Since July 20 is well beyond the discount period, Forrest must pay the full invoice amount plus the freight cost.

**Total Amount to Pay:**
- $8,100 + $80 (freight) = $8,180

So, if Forrest pays on July 20, **Forrest will pay $8,180**.

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Would you like further details or have any questions?

Here are five related questions:
1. What is the significance of the FOB (Free on Board) term in this context?
2. How would the payment change if the freight cost was different?
3. How does the 2/10 EOM term compare with other payment terms like 1/15 or net 30?
4. What impact would delaying the payment even further into July have?
5. How are shipping terms like FOB Boston used in international trade?

**Tip:** Understanding invoice terms can help businesses manage cash flow and take advantage of early payment discounts.

On June 05, Talbots of Boston sold Forrest of Los Angeles $8,100 of fine clothes. Terms were 2/10 EOM FOB Boston. Talbots agreed to prepay the $80 freight. If Forrest pays the invoice on June 8, what will Forrest pay? If Forrest pays on July 20, what will Forrest pay?

Learn how to calculate the payment amount for an invoice with 2/10 EOM terms, including freight costs. Understand how early payment discounts work and how they impact the total payment. This example covers financial math concepts suitable for Grades 10-12.

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