Question

Damon Company sold merchandise to a customer on credit for $10,000 with credit terms of 1/10, n/30.  The invoice was dated April 14.

Which one of the following statements is true?

	a.	The customer can take a $1,000 discount if the invoice is paid by May 13
	b.	The customer should pay $9,500 if the invoice is paid by April 24
	c.	The customer must pay $10,000 if paid after April 24
	d.	The customer must pay a $100 penalty if payment is made after May 13

Answer 1

The interpretation of sentence "credit terms of 1/10, n/30" is customer can avail discount of 1% if he has paid within 10 days otherwise he should pay within 30 days from the invoice date,

For the given case to avail discount $1000 (10000*1%) customer must pay before April 24 (10 days from invoice date) otherwise he should pay $10000 after April 24.

Hence most appropriate option is :

c.	The customer must pay $10,000 if paid after April 24