Question

A buyer of $7,700 in merchandise inventory failed to take advantage of the vendor's credit terms of 3/15, n/45, and instead paid the invoice in full at the end of 45 days. By not taking advantage of the cash discount, the buyer lost the discount of:a. 100b. 77c. 1155d. 770e. 231

Answer 1

Answer:

231

Explanation:

The phrase  3/15, n/45 is a credit term used to ascertain the discount allowed amount. The term  means that should the buyer make full payment with in the first fifteen days, they get a 3% discount. If the payment is made on the 45 days, they make the net payment or nil discount.

The merchandise costs $7, 700, since payment was made on the 45th day, no discount will be allowed. If the buyer took advantage of a 3% discount, they would have saved.

3% of $7700

=3/100 x 7700

=0.03 x $7700

=231