An invoice for $40,000 dated March 15 with terms 3/10, 2/20, n/30, ROG was received in the mail on March 18. The shipment of goods was received on March 28. What payment April 8 would reduce the outstanding balance to $20,000?
A) $19,600
B) $20,000
C) $20,400
D) $20,600
E) $19,400

Question

Quizplus · Accepted Answer

The terms 3/10, 2/20, n/30, ROG mean a 3% discount if paid within 10 days of receipt of goods. Since the goods were received on March 28, the 10-day period ends on April 7. Paying on April 8 misses the 3% discount but is within the 20-day period for a 2% discount. A 2% discount on $40,000 is $800, so the payment would be $40,000 - $800 = $39,200. To reduce the balance to $20,000, the payment should be $40,000 - $20,000 = $20,000. Therefore, the payment is $19,600 ($39,200 - $20,000).

An Invoice for $40,000 Dated March 15 with Terms 3/10