A director of accounts received a bill for for a $674, dated October 6, with sales terms 5 / 10, 2 / 20, n / 30 . The bill was paid October 21. Find the cash discount and net amount paid.

Question

Quizplus · Accepted Answer

To find the cash discount, we first need to determine which sales term applies to the payment date of October 21. Since the payment was made within the first 10 days, the 5% discount applies. 
Cash discount = $674 x 0.05 = $33.70
Net amount paid = $674 - $33.70 = $640.30
Therefore, the best choice is (D).

A Director of Accounts Received a Bill for for a $674