Vail Ski Shop received a $1,203 invoice dated July 10 with 4/10, 3/15, n/60 terms. On...

Vail Ski Shop received a $1,203 invoice dated July 10 with 4/10, 3/15, n/60 terms. On July 24, Vail sent a $487 partial payment.

a. What credit should Vail receive? (Round your answer to the nearest cent.)
b. What is Vail’s outstanding balance? (Round your answer to the nearest cent.)

Expert Solution

Answer a.

Vail purchased goods with invoice value of $1,203 with credit term of 4/10, 3/15, n/60 on July 10. Vail made a partial payment of $487 on July 24.

Vail made this payment in 14 days; hence he is eligible for a discount of 3%

Amount Paid = Invoice Value of Payment * (1 - Discount Rate)
$487 = Invoice Value of Payment * (1 - 0.03)
$487 = Invoice Value of Payment * 0.97
Invoice Value of Payment = $502.06

Answer b.

Outstanding Balance = $1,203.00 - $502.06
Outstanding Balance = $700.94

jeff jeffy answered 2 years ago

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