A store receive an invoice for $1773.75 dated January 23 with terms 3/10, 1.5/25, n/45.
a) What is the balance after a payment of $1250 on Februray 2?
1250/(1-.03)=1288.66
1288.66-1773.75=485.09
Answer for (a)$485.09
b) What additional payment on February 17 will settle the invoice?
1250/(1-.015)=1269.04
1269.04 + 485.09=1754.13
1754.13-1773.75=19.62
Answer for (b)$19.62
To determine the balance after a payment of $1250 on February 2, you need to calculate the amount of the payment that will be applied to the invoice.
First, you apply the discount of 3% for payment made within 10 days. To find the amount after the discount, you divide the payment by (1 - 0.03):
1250 / (1 - 0.03) = 1288.66
Next, you subtract this amount from the original invoice amount to find the remaining balance:
1288.66 - 1773.75 = 485.09
So the balance after a payment of $1250 on February 2 is $485.09.
To determine the additional payment needed to settle the invoice on February 17, you follow a similar process.
First, you apply the discount of 1.5% for payment made within 25 days. To find the amount after the discount, you divide the remaining balance from the previous calculation by (1 - 0.015):
485.09 / (1 - 0.015) = 492.05
Next, you add this amount to the remaining balance from the previous calculation:
492.05 + 485.09 = 977.14
Finally, you subtract this amount from the original invoice amount to find the additional payment needed:
1773.75 - 977.14 = 796.61
So the additional payment needed on February 17 to settle the invoice is $796.61.