Question

Mark: /12 OPMT 1110 Quiz 4 Set: Last Name: First Name: Amount paid 1-d Amount to be paid = Credit given x (1 - d) Credit given A retailer received two invoices from the same supplier with payment terms 2/10, 1/20, n/30. The first invoice for $65,000 is dated Sept 2, and the second one for $85,000 is dated Sept 10. (a) On Sept 20, they sent in a cheque for $100,000. After paying off the Sept 2 invoice, how much of the $100,000 cheque is left to use towards paying the second invoice? [4 marks] ANSWER: (b) How much of the Sept 20 payment will be credited towards the Sept 10 invoice if the supplier allows cash discounts on partial payments? How much is still owing after the payment? [5 marks]

Answer 1

Sol

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Invoice date Sept 2 Sept 10 Invoice Amount $ S 65,000 85,000 Pay term 2/10,1/10,n/30 (2 % discount if paid in 10 days, 1% if paid in 20 days, Credit term is 30 days) a) $ $ Cheque sent on Sept 20 (a) Invoice Value of Sep 2 Invoice (b) Discount applicable on Sep 2 Invoice (c) Discount rate on Sep 2 Invoice (d=b*c) Amount paid for Sep 2 Invoice (e=b-d) Cheque left to use toward paying second invoice (f=a-e) 100,000 65,000 1% (Amount paid within 20 days) 650 $ $ $ 64,350 35,650 b) $ $ Cheque left to use toward paying second invoice (f) Invoice Value of Sep 10 Invoice (g) Discount applicable on Sep 10 Invoice ( h) Amount paid for Sep 10 Invoice (i = f/(1-h%) ) Amount still owing after the payment(g-i) 35,650 85,000 2% (Amount paid within 10 days) 36,377.55 =35650/98% 48,622.45 S $