Vail Ski Shop received a $1,201 invoice dated July 8 with 2/10, 1/15, n/60 terms. On July 22, Vail sent a $485 partial payment. (If more than one discount, assume date of last discount)
a. What credit should Vail receive?
Credit $
b. What is Vail’s outstanding balance?
Outstanding balance $
To calculate the credit that Vail should receive and the outstanding balance, we need to first understand the terms mentioned in the invoice.
The terms are stated as "2/10, 1/15, n/60". This means that if Vail pays the invoice within 10 days, they will be eligible for a 2% discount. If they pay within 15 days, they will be eligible for a 1% discount. If they pay between 16 and 60 days, they will receive no discount.
Now let's calculate the credit and outstanding balance:
a. To determine the credit that Vail should receive, we need to see if the partial payment of $485 qualifies for any discount. Since the payment was made on July 22, it falls within the 10-day discount period from the date of the invoice (July 8).
Therefore, Vail is eligible for the 2% discount on the partial payment of $485. The credit can be calculated by multiplying the payment amount by the discount rate:
2% of $485 = 0.02 * $485 = $9.70
So, Vail should receive a credit of $9.70.
b. To calculate the outstanding balance, we deduct the credit from the original invoice amount and subtract the partial payment made by Vail:
Invoice amount = $1,201
Partial payment = $485
Credit = $9.70
Outstanding balance = (Invoice amount - Credit) - Partial payment
Outstanding balance = ($1,201 - $9.70) - $485
Outstanding balance = $1,191.30 - $485
Outstanding balance = $706.30
Therefore, Vail's outstanding balance is $706.30.