On February 12,Horseshoe Bend Company purchases $25,000 of merchandise from a vendor with credit terms of 2/10,n/30.If Horseshoe Bend pays the vendor on February 21,the amount of the payment should be ________.

Question

Quizplus · Accepted Answer

The credit terms 2/10, n/30 indicates that the vendor offers a 2% discount if payment is made within 10 days, otherwise the full amount is due within 30 days.

Since Horseshoe Bend pays on February 21, they are taking advantage of the discount period. The discount is calculated as follows:

$25,000 x 0.02 = $500

So the amount of the payment with the discount is the purchase price minus the discount:

$25,000 - $500 = $24,500

Therefore, the correct answer is B.

On February 12,Horseshoe Bend Company Purchases $25,000 of Merchandise from a Vendor