Ned's Sheds purchases building materials from Timber town 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 understand the terms stated in the invoice.
The terms "4/15, n/30" mean that the buyer (Ned's Sheds) can take a cash discount of 4% if the payment is made within 15 days of the invoice date. Otherwise, the full payment is due within 30 days.
First, we calculate the discount period by adding the number of days allowed for the discount to the invoice date:
October 17 + 15 days = November 1
Therefore, the partial payment must be sent by November 1 to take advantage of the cash discount.
Now, let's calculate the balance still due on the order if the partial payment of $2,000 was sent by the discount date.
The original amount owed to Timber town Lumber is $3,700. To determine the new balance after the partial payment, we subtract the partial payment from the original amount:
$3,700 - $2,000 = $1,700
So, if the partial payment of $2,000 was sent by the discount date, the balance still due on the order would be $1,700.