What payment should be made on an invoice in the amount of $3,400 dated August 7 if the terms of sale are 3/15, 2/30, n/45 and the bill is paid on August 19?
What payment should be made on the invoice from the previous question if it is paid on September 3?
To determine the payment that should be made on an invoice with the given terms of sale, we need to understand the meaning of those terms.
The terms indicated are 3/15, 2/30, n/45. These terms are standard abbreviations used in the business world to specify the discount offered for early payment and the due date for the invoice.
Let's break down the terms:
- The first number (numerator) represents the discount percentage offered.
- The second number (denominator) represents the number of days within which the discount is applicable.
- The last number (n/45) represents the net payment due within 45 days (the total amount without any discount).
In this case, with terms of 3/15, 2/30, n/45:
- The discount offered is 3%.
- The discount period is 15 days.
- The net payment due within 45 days.
Now, let's calculate the payment for each scenario:
1. August 19 Payment:
The invoice is dated August 7, and the payment is made on August 19. This falls within the discount period of 15 days. Therefore, the discount of 3% can be applied to the invoice amount of $3,400.
Discount = Invoice amount * Discount rate
Discount = $3,400 * 3%
Discount = $3,400 * 0.03
Discount = $102
Payment = Invoice amount - Discount
Payment = $3,400 - $102
Payment = $3,298
The payment to be made on August 19 is $3,298.
2. September 3 Payment:
If the invoice is paid on September 3, it is no longer within the discount period of 15 days. Therefore, the discount cannot be applied.
The payment to be made will be the full invoice amount of $3,400.
The payment to be made on September 3 is $3,400.