An invoice for $50,000 dated March 15 with terms 3/10, 2/20, n/30 is received in the mail on March 17. If the company wants to reduce the outstanding balance to $25,000, how much should they pay on March 26?
A) $24,250
B) $25,000
C) $24,500
D) $25,500
E) $25,750

Question

Quizplus · Accepted Answer

To reduce the outstanding balance to $25,000, the company can take advantage of the 2/20 discount by paying within 20 days from March 15. The discount is 2% of $25,000, which is $500. Therefore, they should pay $25,000 - $500 = $24,500 on March 26 to utilize the discount and reduce the balance to $25,000.

An Invoice for $50,000 Dated March 15 with Terms 3/10