You've received an invoice for $3,000 with terms of 3/10, 1/20, n/30. How much will you have to pay if you pay the bill in 12 days?
0.01 * 3,000 = 30
$3,000 - 30 = ?
Bill is paid at 12th day. so it satisfies 1/20 condition
This means 1% discount on $3000.
This gives $30.
Thus to pay $(3000 - 30)
To calculate how much you have to pay if you pay the bill in 12 days, you need to understand the meaning of the terms 3/10, 1/20, n/30.
The terms on the invoice are expressed in the form of (X/Y, A/B, C/Z). Let's break it down:
1. X/Y: This term represents a cash discount percentage available if the invoice is paid within a specified number of days from the invoice date (usually referred to as the "discount period"). In this case, it is 3/10, which indicates a 3% discount if the invoice is paid within 10 days. So, you are eligible for a 3% discount if you pay within 10 days.
2. A/B: This term represents a cash discount percentage available if the invoice is paid within an extended period, which is longer than the initial discount period mentioned above. In this case, it is 1/20, which indicates a 1% discount if the invoice is paid within 20 days. So, if you don't pay within the initial 10 days, but pay within the next 20 days, you can still get a 1% discount.
3. C/Z: This term represents net days available for full payment without any discount. In this case, it is n/30, where n is not specified. This means that if you don't take advantage of the earlier discounts, you must pay the full amount within 30 days.
Now that we understand the terms, let's calculate the amount you need to pay if you pay the bill in 12 days.
Since you are paying within the initial discount period of 10 days, you are eligible for a 3% discount. So, you need to subtract this discount from the invoice amount:
Discounted amount = Invoice amount - (3% discount on invoice amount)
Discounted amount = $3,000 - (3/100 * $3,000)
Discounted amount = $3,000 - $90
Discounted amount = $2,910
Therefore, if you pay the bill in 12 days, you will have to pay $2,910.