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 invoice on March 31, 2013, how much sales discount will Eli Company recognize?

Question

Quizplus · Accepted Answer

The terms 1/10, n/30 mean that the customer can take a 1% discount if they pay within 10 days; otherwise, the net (full) amount is due within 30 days. Since Faulkner, Inc. pays on March 31, which is beyond the 10-day discount period, no sales discount will be recognized by Eli Company.

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