Question

True Value received an invoice dated 4/15/12. The invoice had a $5,500 balance that included $300 freight. Terms were 4/10, 3/30, n/60. True Value pays the invoice on April 29. What amount does True Value pay?

Answer 1

Given:
Invoice dated 4/15/12. Amounting to $5,500 which includes $300 freight.
Terms:
4/10 ; 3/30 ; n/60

The term 4/10 means that True value can avail of 4% discount if it pays within 10 days from date of issuance. The 10th day would be 4/25/12

The term 3/30 means that True value can avail of 3% discount if it pays from the 11th day up to the 30th day from the date of issuance.

April 29 is beyond the 10th day but within the 30 days discount period. True Value can avail of the 3% discount.

5,500 - 300 = 5,200  The freight can't be subjected to discount thus it is deducted from the total invoice amount.

5,200 * 3% = 156
5,200 - 156 = 5,044 amount True Value has to pay.