An invoice for $10,000 dated September 10 with terms 3/10, 1½/20, n/30, EOM is received in the mail on September 25. A payment is sent on October 11 for $4,000. What is the outstanding balance?
A) $5,940.00
B) $6,000.00
C) $5,918.37
D) $5,939.08
E) $5,920.00

Question

Quizplus · Accepted Answer

The terms are EOM (End of Month), so the discount periods start from the end of September. The payment on October 11 is beyond the discount periods, so no discount applies. The outstanding balance is $10,000 - $4,000 = $6,000. However, the correct outstanding balance considering the terms and payment is $5,939.08.

An Invoice for $10,000 Dated September 10 with Terms 3/10