When a partial payment is made during the discount period, the amount credited is:

Question

Quizplus · Accepted Answer

When a partial payment is made during the discount period, the amount credited is equal to the partial payment divided by the complement of the cash discount rate. This is because the complement of the cash discount rate represents the amount that is not being discounted, and the partial payment is only being applied to the non-discounted portion of the invoice. For example, if the cash discount rate is 2% and the partial payment is $100, the amount credited would be $100 divided by (1 - 0.02) which equals $102.04.

When a Partial Payment Is Made During the Discount Period