Question

In: Finance

An invoice for $2100, dated February 2, has terms 2/15, 1/30, n/90. If a $670 payment...

An invoice for $2100, dated February 2, has terms 2/15, 1/30, n/90. If a $670 payment was made on February 15, what payment on March 1st will settle the account? Calculate your answer in dollars to two decimal places. Do not enter the $ sign

Solutions

Expert Solution

The terms 2/15, 1/30, n/90 means that the invoice should be settled in 90 days and if settled in
15 days is entitled for a discount of 2% and if settled in 30 days in entitled for a discount of 1%.
Therefore, $670 payment made is after discount of 2% as it was made within 15 days.
The invoice value of $670 = $670/98%
                                                    = $683.67
Remaining amount to be settled = $2700-$683.67
                                                                   = $2016.33
Amount settled on March 1st is entitled for a discount of 1%,
Therefore,
Payment on March 1st = $2016.33 * 99%
                                              = $1996.16

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