City Cellular purchased $28,900 in cell phones on April 25. The terms of sale were 4/20, 3/30, n/60. Freight terms were F.O.B. destination. Returned goods amounted to $650.
a. What is the net amount due if City Cellular sends the manufacturer a partial payment of $5,000 on May 20
b. What is the net date?
c.If the manufacturer charges a 4 % late fee, how much would City Cellular owe if it did not pay the balance by the net date?
a. Well, let's do some math-rithmetic! The net amount due can be calculated by taking the total purchase amount, which is $28,900, and subtracting the partial payment of $5,000. So, the net amount due would be $28,900 - $5,000 = $23,900.
b. Ah, the net date! It’s like an invisible spiderweb that catches all the money. To find the net date, we need to look at the terms of sale. In this case, it's 4/20, 3/30, n/60. The n stands for... well, nobody knows! Just kidding, it means the number of days the buyer has to pay the remaining balance. So, let's add the n value (which is 60) to the date of the partial payment, which was May 20. That would give us the net date as July 19.
c. Now, if City Cellular doesn't pay the balance by the net date, they might get hit with a late fee. The manufacturer charges a 4% late fee, which is like a sneaky hidden debit card swipe. To calculate the late fee, we need to multiply the net amount due by 4% (or 0.04). So if the remaining balance is $23,900, the late fee would be $23,900 * 0.04 = $956.
So, if City Cellular doesn't pay the balance by the net date, they would owe the remaining balance of $23,900 plus the late fee of $956, which equals $24,856. And trust me, you don't want to mess with those late fees – they're like the clowns of the financial world, always popping up when you least expect them!
To calculate the net amount due and the net date, we need to follow these steps:
a. Calculate the net amount due:
1. Start with the total purchase amount: $28,900.
2. Subtract the returned goods amount: $28,900 - $650 = $28,250.
3. Subtract the partial payment made on May 20: $28,250 - $5,000 = $23,250.
Therefore, the net amount due is $23,250.
b. Calculate the net date:
The terms of sale are given as 4/20, 3/30, n/60. These terms indicate the following:
- 4/20: 4% discount if paid within 20 days
- 3/30: 3% discount if paid within 30 days
- n/60: net payment due within 60 days
To find the net date, we need to consider the longest term, which is 60 days.
1. Start with the date of the purchase on April 25.
2. Add 60 days to this date: April 25 + 60 days = June 24.
Therefore, the net date is June 24.
c. If the manufacturer charges a 4% late fee, City Cellular would owe the following if it did not pay the balance by the net date:
1. Calculate the late fee amount by multiplying the net amount due ($23,250) by the late fee rate (4%): $23,250 * 0.04 = $930.
2. Add the late fee to the net amount due: $23,250 + $930 = $24,180.
Therefore, City Cellular would owe $24,180 if it did not pay the balance by the net date.
To answer these questions, we need to break down the information given and apply the terms of sale accordingly. Let's go step by step:
a. To determine the net amount due after City Cellular sends a partial payment of $5,000 on May 20, we need to subtract this payment from the original purchase amount.
Original purchase amount: $28,900
Partial payment made on May 20: $5,000
Net amount due = Original purchase amount - Partial payment
Net amount due = $28,900 - $5,000
Net amount due = $23,900
So, the net amount due after the partial payment on May 20 is $23,900.
b. To find the net date, we need to consider the terms of sale: 4/20, 3/30, n/60. These terms give us the discount period, the payment due period, and the permissible delay for payment without incurring any late fees.
Let's break down the terms:
Discount period (4/20): This means that City Cellular can take a 4% discount if payment is made within 20 days.
Payment due period (3/30): This means that the full payment is due within 30 days from the invoice date.
Permissible delay for payment (n/60): This means that City Cellular can make the payment within 60 days without incurring any late fees.
To find the net date, we need to determine the longest possible delay allowed without incurring any late fees. In this case, it is the "n/60" term, which gives City Cellular a maximum of 60 days to make the payment without any penalties.
Therefore, the net date is 60 days from the invoice date. Since the purchase was made on April 25, we can calculate the net date as:
Net date = Invoice date + Permissible delay for payment
Net date = April 25 + 60 days
Net date = June 24
Thus, the net date is June 24.
c. If the manufacturer charges a 4% late fee, we need to calculate the late fee on any outstanding balance after the net date (June 24) if City Cellular fails to pay by the net date.
Late fee percentage: 4% (charged by the manufacturer)
Outstanding balance after the net date: Net amount due on June 24
To calculate the late fee, we multiply the outstanding balance by the late fee percentage:
Late fee = Outstanding balance after the net date * Late fee percentage
Late fee = Net amount due on June 24 * 4%
Let's assume that City Cellular fails to pay by the net date, and the net amount due on June 24 is $23,900 (as calculated in part a). We can now calculate the late fee as:
Late fee = $23,900 * 4%
Late fee = $23,900 * 0.04
Late fee = $956
Therefore, if City Cellular does not pay the balance by the net date, they would owe a late fee of $956 on top of the outstanding balance.