Question

In: Finance

A company received an invoice for $3904.85 dated June 14 with terms 6​/15​, 2​/30, ​n/60.   ​(a)...

A company received an invoice for $3904.85 dated June 14 with terms 6​/15​, 2​/30, ​n/60.  

​(a) If the invoice is paid on June 20​, how much is to be​ paid?

​(b) If the invoice is paid on July 11​, how much is to be​ paid?

​(c) If the invoice is paid on August 10​, how much is to be​ paid?

Solutions

Expert Solution

Terms of 6/15, 2/30. n/60 means if the invoice is paid within 15 days of bill date then there will be 6% discount, if the invoice is paid within 15 days of bill date then there will be 6% discount and invoice needs to be paid within 60 days. If the invoice is paid between 30 days and 60 days, there will be no discount.

(a) If the invoice is paid on June 20, i.e. within 15 days of bill date of June 14, there will be 6% discount.

Invoice amount = $3904.85

Discount = 6% * $3904.85 = $234.291

Amount to be paid = $3904.85 - $234.291 = $3670.56

(b) If the invoice is paid on July 11, i.e. within 30 days of bill date of June 14, there will be 2% discount.

Invoice amount = $3904.85

Discount = 2% * $3904.85 = $78.097

Amount to be paid = $3904.85 - $78.097 = $3826.75

(c) If the invoice is paid on August 10, i.e. within 30 - 60 days of bill date of June 14, there will be no discount. Entire invoice amount needs to be paid.

Invoice amount = $3904.85

Amount to be paid = $3904.85


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