Question

Stacy's Dress Shop received a $1,150 invoice dated July 18 with 4/10, 3/15, n/60 terms. On August 01, Stacy's sent a $252 partial payment. a. What credit should Stacy's receive? (Round your answer to the nearest cent.) Credit b. What is Stacy's outstanding balance? (Round your answer to the nearest cent.) Outstanding balance

Answer 1

a)

4/10 means if payment is made within 10 days then 4% discount will be available to Stacy Dress Shop and 3/15 means if the payment is made within 15 days then 3% discount will be available.

The partial payment is made on August 1 so it is paid on 15th day from July 18th to August 1st, so 3% discount is available, hence, the credit amount is $7.56 ($252*3/100).

Therefore, credit that Stacy will receive is $7.56.

b)

Outstanding balance = Total amount owed - Partial Payment

= $1,150 - $252

= $898

Therefore, outstanding balance is $898.

Answer 2

Credit = 259.79  $252/.97  amount paid divided by 3/15 terms

Outstanding balance = 890.21  invoice amount minus credit amount