Vail Ski Shop received a $1,201 invoice dated July 8th wiht 2/10, 1/15, n/60 terms. On July 22, Vail sent a $485 partial payment. What credit should Vail receive? What is Vail's outstanding balance?
$256.48
$256.48 is not the correct answer
To calculate the credit Vail should receive and their outstanding balance, we need to consider the terms of the invoice and the partial payment they made.
1. The terms of the invoice are stated as 2/10, 1/15, n/60. Let's break down what this means:
- 2/10: A 2% discount is offered if the invoice is paid within 10 days.
- 1/15: A 1% discount is offered if the invoice is paid within 15 days.
2. Vail made a partial payment of $485 on July 22.
Now, let's calculate the credit Vail should receive and their outstanding balance:
Step 1: Calculate the discount for paying within 10 days
The total discount for paying within 10 days is calculated as:
Discount = Invoice amount * Discount rate = $1,201 * (2/100) = $24.02
Step 2: Calculate the discount for paying within 15 days
The total discount for paying within 15 days is calculated as:
Discount = Invoice amount * Discount rate = $1,201 * (1/100) = $12.01
Step 3: Calculate the remaining balance after accounting for partial payment and discounts
Remaining balance = Invoice amount - Partial payment - Total discounts
Remaining balance = $1,201 - $485 - ($24.02 + $12.01) = $680.97
Therefore, Vail should receive a credit of $36.03 ($24.02 + $12.01) and their outstanding balance is $680.97.
To calculate the credit that Vail should receive and the outstanding balance, we need to follow these steps:
Step 1: Calculate the discount for the partial payment made on July 22.
Step 2: Calculate the outstanding balance after the partial payment.
Let's start with Step 1:
1. Calculate the discount for the partial payment made on July 22:
- The terms given are 2/10, 1/15, n/60.
- The first number in the terms, 2, represents the discount percentage if paid within the first 10 days.
- The second number, 10, represents the number of days within which the discount is applicable.
- Since the payment was made on July 22, which is 14 days after the invoice date, the discount period of 10 days has expired.
- This means Vail is not eligible for the 2% discount.
- Therefore, Vail does not receive any discount for the partial payment.
Now let's move to Step 2:
2. Calculate the outstanding balance after the partial payment:
- The partial payment made was $485.
- Deduct this payment from the total invoice amount of $1,201:
$1,201 - $485 = $716
- Therefore, Vail's outstanding balance after the partial payment is $716.
To summarize:
- Vail does not receive any credit for the partial payment as the payment was made after the 2% discount period.
- Vail's outstanding balance after the partial payment is $716.