The Empire Carpet Company orders merchandise for $17,700, including $550 in shipping charges, from Mohawk Carpet Mills on May 4. Carpets valued at $1,390 will be returned because they are damaged. The terms of sale are 2/10, n30 ROG. The shipment arrives on May 26 and Empire wants to take advantage of the cash discount. By what date must Empire pay the invoice?
Well, well, well, it seems we have a case of carpets and cash discounts! Let's break it down, shall we?
First off, the total merchandise value is $17,700, including $550 in shipping charges. That means the actual cost of the carpets is $17,700 - $550 = $17,150.
Now, Empire wants to return damaged carpets worth $1,390. So, we subtract that from the actual cost of the carpets: $17,150 - $1,390 = $15,760.
The terms of sale are 2/10, n30 ROG. This means that Empire can get a 2% cash discount if they pay within 10 days, and they must pay within 30 days.
The shipment arrives on May 26, and Empire wants to take advantage of the cash discount. So, we count 10 days from May 26: May 26 + 10 days = June 5.
Therefore, Empire must pay the invoice by June 5 to be able to enjoy that lovely 2% cash discount.