Question

Sarah just received an invoice for $12,000 with terms of 2/10, n/30. The invoice date was June. Her contract with the vendor indicates a charge of 1.5 percent per month on late payments.If Sarah pays this bill on June 15, she will send the vendor a check for:______.A) $11,760.B) $12,000.C) $12,180.D) Cannot answer without more information.

Answer 1

Answer:

B: $12,000

Explanation:

Sarah will pay $ 12,000 as the invoice has a term that indicates a cash discount (2/10) of 2% if payment is made with in 10 days from the date of invoice and (n/30) no discount is given if payment is made after 30 days.

As Sarah paid the invoice after 15 days of invoice assuming the invoice date was 1st June then no discount is received by Sarah.

No interest of late payment has also been charged as it pays the invoice with in the normal 30 days credit limit.