Question

If an organization purchases $700 of supplies on account, with terms of 2/15, n50, what amount must be paid within 15 days of the invoice date?

1) $650
2) $698
3) $686
4) $714

Answer 1

The amount that must be paid within 15 days to avail of the discount for a $700 purchase with terms 2/15, n/50, is $686 after applying the 2% discount.

Step-by-step explanation:

If an organization purchases $700 of supplies on account, with terms of 2/15, n/50, this means the organization can take a 2% discount if the amount is paid within 15 days of the invoice date. Otherwise, the net amount is due within 50 days without any discount.

The terms of 2/15, n50 means that if an organization purchases $700 of supplies on account, they will receive a 2% discount if paid within 15 days. If they do not pay within 15 days, they must pay the full amount within 50 days.

To calculate the discounted amount:

• Calculate 2% of $700, which is $700 × 0.02 = $14.
• Subtract the discount from the total amount: $700 - $14 = $686.

Therefore, the amount that must be paid within 15 days to avail of the discount is $686.