Chadmark Corporation's budgeted monthly sales are $3,000. The company sells on credit with terms of 2/10 net 45. Forty (40) percent of Chadmark's customers pay on Day 10 and take the 2 percent discount; the remaining 60 percent pay in the month following the sale (on Day 45), so they pay the full invoice price. What is Chadmark's total cash receipts for a typical month?

Question

Quizplus · Accepted Answer

We can calculate Chadmark's total cash receipts as follows:

- 40% of customers take the 2% discount and pay on Day 10: $3,000 x 0.4 x 0.98 = $1,176
- 60% of customers pay the full invoice price on Day 45: $3,000 x 0.6 = $1,800

Therefore, Chadmark's total cash receipts for a typical month would be $1,176 + $1,800 = $2,976.

The correct answer is B.

Chadmark Corporation's Budgeted Monthly Sales Are $3,000