Smith of Victorville sold office equipment for $12,500 to Frank of Barstow. Terms of the sale are 2/10, n/30 FOB Victorville. Assume Frank pays within the discount period. How much will Frank pay?
To determine how much Frank will pay, we need to calculate the discount amount and subtract it from the total amount.
The terms of the sale state 2/10, n/30. This means that the buyer, Frank, is entitled to a 2% discount if payment is made within 10 days, and the full amount is due within 30 days.
Step 1: Calculate the discount amount.
The discount percentage is 2% of the total amount.
Discount = 2% * $12,500
= 0.02 * $12,500
= $250
Step 2: Subtract the discount from the total amount to find the payment amount.
Payment amount = Total amount - Discount
= $12,500 - $250
= $12,250
Therefore, if Frank pays within the discount period, he will pay $12,250.