Eli Company sells novelty items and offers terms of 1/10, n/30 to credit customers. One customer, Faulkner, Inc., purchased 100 Sweet-16 party decor packs with a list price of $20 each on March 5, 2019.
-Refer to the information provided for Eli Company. If the customer pays the amount of the invoice for its purchase on March 14, 2019, how much cash will Eli Company receive?

Question

Quizplus · Accepted Answer

The total list price for 100 Sweet-16 party decor packs is $20 x 100 = $2,000.
Since Faulkner, Inc. paid on March 14, 2019, they are eligible for the discount of 1% for paying within 10 days. The amount of the discount is $2,000 x 1% = $20.
Therefore, the net amount due (after discount) is $2,000 - $20 = $1,980.
So Eli Company will receive $1,980 in cash from Faulkner, Inc.

Eli Company Sells Novelty Items and Offers Terms of 1/10