Question

On March 12, Medical Waste Services provides services on account to Grace Hospital for $11,000, terms 2/10, n/30. Grace pays for those services on March 20. What is the amount of discount if Grace pays within the discount period?

1) 2%
2) 10%
3) 20%
4) 30%

Answer 1

When a customer pays within the discount period, they can receive a discount on their total bill. In this example, Grace Hospital paid within the discount period of 10 days, so they are eligible for the discount. The amount of discount they will receive is $220.

Step-by-step explanation:

When a customer pays within the discount period, they are eligible for a discount on their total bill. In this case, the terms are 2/10, n/30, which means that if the customer pays within 10 days, they can take a 2% discount on the total bill. The net amount is due within 30 days.

In this scenario, Grace Hospital paid on March 20, which is within the discount period of 10 days. So they can take advantage of the discount.

To calculate the discount amount, we multiply the total bill by the discount rate. The total bill is $11,000, and the discount rate is 2%. Therefore, the amount of discount Grace Hospital receives is $11,000 * 2% = $220.