Zahir Antiques purchases merchandise having an invoice price of $12,900. The terms of sale are 3/15, n/30. What is the cash discount if the bill is paid by the 15th day?
I have no idea how to do this:(
3/15, n/60 means a buyer will receive a 3% cash discount if paid within 15 days of the invoice date, and the buyer has a maximum of 60 days to pay the entire debt amount, so it looks like they get the 3% discount
So what do you think you should do?
No problem! Let me explain how to calculate the cash discount using the given terms of sale.
The terms "3/15, n/30" represent the credit terms offered by the supplier. The numbers in this format have specific meanings:
- The first number (in this case, 3) represents the percentage of discount offered if the payment is made within the specified number of days (in this case, within 15 days).
- The second number (in this case, 15) represents the number of days within which the payment should be made to avail of the discount.
- The letter "n" represents the net amount due, which means the full invoice amount without any discount.
- The third number (in this case, 30) represents the total credit period allowed, after which the full amount is due without any discount.
To calculate the cash discount, you need to multiply the invoice price by the discount percentage. In this case, the discount percentage is 3%, or 0.03 in decimal form.
Cash discount = Invoice price * Discount percentage
Cash discount = $12,900 * 0.03
Cash discount = $387
Therefore, the cash discount if the bill is paid by the 15th day is $387.