Question

Jason received an invoice for $5,000, and the invoice was dated on August 26 with terms of 2/10, n/45 EOM. Please answer the following questions:

(1) How much did Jason owe if the bill is paid by September 26?

(2) When will be the last day that Jason can receive the cash discount?

(3) When will be the last day that Jason has to pay for this bill?

Answer 1

Explanation:

Consider the provided information.

Jason received an invoice for $5,000, and the invoice was dated on August 26.

Part 1)

We need to find the bill Jason needs to pay by September 26.

n/45 means invoice amount should be paid within 45 days after the august 26.

From August 26 to September 26 Jason complete a month.

Thus, Jason just need to pay only $5,000. Which is the invoice amount.

Part 2)

The last day of discount can be calculated by 2/10.

Here, the 2/10 represents that discount of 2% within 10 days.

Now, calculate the 10 days form August 26.

The 10 days from August 26 is September 5.

Hence, September 5 is the last day that Jason can receive the cash discount.

Part 3)

Now, we need to calculate the last day that Jason has to pay for the bill.

n/45 means invoice amount should be paid within 45 days after the august 26.

Hence, the sum of the invoice should be paid within 45 days of August 26, whatever the date.