Question

Vail Ski Shop received a $1,214 invoice dated July 21 with 3/10, 2/15, n/60 terms. On August 04, Vail sent a $498 partial payment. (If more than one discount, assume date of last discount)

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

Answer 1

The credit Vail Ski Shop should receive is equal to the partial payment made, which is $498.00. Their outstanding balance after the partial payment is $716.00.

Step-by-step explanation:

To answer the student's question regarding the credit Vail Ski Shop should receive and their outstanding balance following a partial payment, we must first understand the invoice terms. The terms '3/10, 2/15, n/60' indicate that the customer can take a 3% discount if they pay within 10 days, a 2% discount if they pay within 15 days, or the net full amount within 60 days from the invoice date. Since Vail sent a partial payment of $498 after the discount periods, no discount applies.

a. What credit should Vail receive?
Since no discount is applicable, Vail's credit will be the amount of the partial payment, which is $498.00.

b. What is Vail’s outstanding balance?
To find the outstanding balance, we subtract the partial payment from the initial invoice amount:
$1,214.00 (original invoice) - $498.00 (partial payment) = $716.00.
The outstanding balance Vail Ski Shop owes is $716.00.