I am having such a hard time trying to figure this question out, the steps just
ID: 3216621 • Letter: I
Question
I am having such a hard time trying to figure this question out, the steps just don't make sense...can anyone help explain. Please I am beyond confused I thought I was imputing the right numbers but its not working.
Office Max purchased office furniture in the amount of $89,517 and was invoiced with terms of 2/10, n/30. Cash strapped at the time, Office Max decided to make a partial payment of $50,000 within 10 days. How much should be credited to its account? What is the outstanding balance?
Terms
Cash Discount %
Invoice total
Partial payment made before discount date
Amount Credited
=partial payment/(1-Cash Discount%)
Amount Still Due On Account
=Invoice total –Amount Credited
Terms
Cash Discount %
Invoice total
Partial payment made before discount date
Amount Credited
=partial payment/(1-Cash Discount%)
Amount Still Due On Account
=Invoice total –Amount Credited
Explanation / Answer
Please see the answers below
Terms
The terms 2/10, n/30 indicate that the buyer may take an early payment discount of 2% of the amount owed if the amount owed is remitted within 10 days instead of the normal 30 days
Cash Discount %
2 %
Invoice total
89517
Partial payment made before discount date
50000
Amount Credited
=partial payment/(1-Cash Discount%)=
50000/(1-0.02)= 51020
Amount Still Due On Account
=Invoice total –Amount Credited
= 89517-51020 = 38497
Terms
The terms 2/10, n/30 indicate that the buyer may take an early payment discount of 2% of the amount owed if the amount owed is remitted within 10 days instead of the normal 30 days
Cash Discount %
2 %
Invoice total
89517
Partial payment made before discount date
50000
Amount Credited
=partial payment/(1-Cash Discount%)=
50000/(1-0.02)= 51020
Amount Still Due On Account
=Invoice total –Amount Credited
= 89517-51020 = 38497
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