The cash discount terms for a purchase worth $1,000 made on August 1 are 3/10, net 30. How much will the buyer have to pay if he makes the payment on August 7?

Question

Quizplus · Accepted Answer

The cash discount terms 3/10 imply that the buyer can take a discount of 3% if payment is made within 10 days, otherwise the full amount is due in 30 days.

If the payment is made on August 7, the buyer still qualifies for the discount because it is within the 10-day period. The amount of the discount is:

3% of $1,000 = $30

Therefore, the buyer will have to pay:

$1,000 - $30 = $970

So, the best choice is E.

The Cash Discount Terms for a Purchase Worth $1,000 Made