City Cellular purchased $28,900 in cell phones on April 25. The terms of sale were 4/20, 3/30, n/60. Freight terms were F.O.B. destination. Returned goods amounted to $650. What is the net amount due if City Cellular sends the manufacturer a partial payment of $5,000 on May 20? )


If the manufacturer from the question above charges a 4½% late fee, how much would City Cellular owe if it did not pay the balance by the net date?

To calculate the net amount due and the potential late fee, we need to break down the information given and perform the necessary calculations.

1. Calculate the purchase amount:
City Cellular purchased $28,900 in cell phones.

2. Determine the terms of sale:
The terms are given as 4/20, 3/30, n/60. These terms indicate that the buyer may receive a discount if payment is made within a specified number of days. In this case:
- 4/20 means a 4% discount is available if payment is made within 20 days.
- 3/30 means a 3% discount is available if payment is made within 30 days.
- n/60 means that if payment is made within 60 days, no discount applies.

3. Consider the returned goods:
$650 worth of goods were returned, which we need to deduct from the purchase amount.

4. Calculate the partial payment:
City Cellular sent the manufacturer a partial payment of $5,000 on May 20.

Now we can calculate the net amount due:

Step 1: Deduct the returned goods:
Purchase amount - Returned goods = $28,900 - $650 = $28,250

Step 2: Calculate the discount for the partial payment made on May 20:
Partial payment * (1 - discount percentage) = $5,000 * (1 - 3%) = $5,000 * 0.97 = $4,850

Step 3: Calculate the net amount due:
Purchase amount - Partial payment = $28,250 - $4,850 = $23,400

If City Cellular does not pay the balance by the net date and incurs a late fee, we can calculate the amount owed:

Step 4: Calculate the late fee:
Net amount due * Late fee percentage = $23,400 * 4.5% = $23,400 * 0.045 = $1,053

Step 5: Calculate the total amount owed:
Net amount due + Late fee = $23,400 + $1,053 = $24,453

Therefore, if City Cellular did not pay the balance by the net date, the amount owed would be $24,453.