Question

The Patterson Corporation has received an invoice dated May 1st for $4,000 with credit terms of 3/10, net 60. If the company pays on May 10th day, how much will they need to pay

Answer 1

The Patterson Corporation

The company will pay the sum of:

$3,880

Step-by-step explanation:

a) Data and Calculations:

May 1 Invoice received = $4,000

Credit terms = 3/10, net 60

Payment date = May 10

Discount = $4,000 * 3% = $120

Amount paid = $4,000 97% = $3,880

b) The credit terms of 3/10, net 60 implies that there is a cash discount of 3% on the invoice amount if payment is made within 10 days of the invoice date. The credit period is only 60 days, after which, interest will be incurred.