On August 18, Sullivan Company received an invoice in the amount of $6,700, having terms of sale of 4/15 EOM. What is the discount date?
To determine the discount date for the invoice with terms of 4/15 EOM, we need to follow these steps:
Step 1: Find the EOM (end of the month) date.
To calculate the EOM date, we need to add one month to the invoice date. In this case, the invoice date is August 18. Adding one month takes us to September 18, which is the EOM date.
Step 2: Subtract the number of days from the EOM date to find the discount date.
The terms 4/15 indicate that a discount of 4% is offered if the invoice is paid within 15 days. To calculate the discount date, we subtract 15 days from the EOM date (September 18) as follows:
September 18 - 15 days = September 3
Therefore, the discount date for this invoice is September 3. This means that if Sullivan Company pays the invoice by September 3, they can take advantage of the offered discount.