Question

A retailer has received an invoice of $23,240 dated June 20, terms 3/15, n/30 EOM, fora shipment of microwave ovens that arrived on July 25.a) What is the last day for taking the cash discount?b) How much is to be paid if the discount is taken? $

Answer 1

For a purchase of $23240 is offered a discount of 3/15 if the payment is given at most 30 days after June 20.

a) What is the last day for taking the cash discount?

Since the invoice is dated on June 20, and the discount offered is 3/15, the buyer will have 15 days to pay the invoice with discount, that is the last day for taking the cash discount is July 5.

b) How much is to be paid if the discount is taken?

Since the discount offered is 3/15 the discount is the 3% of the total invoice value, that is

`Discount=\$\text{ }23,240*3\%=\$697.2`

That is, the discount is $697.2 if the invoice is paid within 15 days after 20 June