Question

: two customers purchased $315 of merchandise from the same store on account. the terms of both sales were 3/15, n/45. interest charged after 45 days is 1% per month. the first customer paid $305.55, and the second customer paid $315. yet both of their accounts were marked paid in full. why?

Answer 1

Answer:

Because one customer paid within the "discount period" and one did not.

Explanation:

The terms of 3/15, n/45 mean the customer will receive a 3% discount (as an incentive to pay sooner) if paid within 15 days. n/45 means the "net" (full) amount is due in 45 days.

3%* $315 = $9.45 discount if paid in 15 days

$315 - 9.45 = $305.55

So, using the math we can double check that the first customer did indeed receive a 3% discount meaning they only owed $305.55 which was paid in full.