Question

Hudson's Bay received an invoice dated July 13 from Nygard International in the amount of $206,731.75. The terms are 2/10, 1/20, n/30. If Nygard receives full payment on August 1, what amount is paid?

Answer 1

Sol:

The invoice date is on July 13, invoiced by Nygard International For the amount of $206,731.75

The credit terms are given as 2/10, 1/20, n/30 which means,

2% discount if paid in 10 days

1% discount if paid in 20 days and the final credit period is 30 days with no discount.

According to the information given, we have to calculate the amount received by Nygard on August 1.

This means that it is clearly understood that Hudson Bay makes the full payment to Nygard in 20 days (starting from July 13 till August 1 = 19days + 1day = 20 days)

So discount allowed by Nygard is 1% as Hudson Bay pays in 20 days - credit term 1/20.

1% Discount on $206,731.75 = 206,731.75 x 1/100 = $2,067.3175 = $2067.32(rounded off to 2 decimal places)

The amount paid by Hudosn to Nygard after discount of 1% is

Total Invoice value - Discount = $206,731.75 - $2067.32 = $204,664.43

So the amount paid by Hudson to Nygard is $204,664.43