Ned’s Sheds purchases building materials from Timbertown Lumber for $3,700 with terms of 4/15, n/30. The invoice is dated October 17. Ned’s decides to send in a $2,000 partial payment. By what date must the partial payment be sent to take advantage of the cash discount?
Considering the scenario from the previous question, if partial payment was sent by the discount date, what is the balance still due on the order?
To determine the date by which the partial payment must be sent to take advantage of the cash discount, we need to consider the terms mentioned in the question.
The terms are mentioned as 4/15, n/30. Here's what they mean:
- The first number (4) represents the percentage of cash discount offered by the seller. In this case, the cash discount is 4%.
- The second number (15) represents the number of days within which the buyer should make the payment in order to receive the cash discount.
- The phrase "n/30" means that the net amount (full payment) is due within 30 days from the invoice date.
In this case, the invoice is dated October 17. To determine the date by which the partial payment must be sent to take advantage of the cash discount, we need to count 15 days from the invoice date.
So, the partial payment must be sent by November 1st (15 days after October 17) to take advantage of the cash discount.
Now, let's move on to the second part of the question.
If the partial payment of $2,000 was sent by the discount date (November 1st in this case), we can calculate the balance still due on the order by subtracting the partial payment from the total purchase amount.
Total purchase amount: $3,700
Partial payment: $2,000
Balance still due: $3,700 - $2,000 = $1,700
Therefore, the balance still due on the order would be $1,700 if the partial payment of $2,000 was sent by the discount date.