Homework Answers
The term 2/10 means that 2% discount will be given to customers if they make the payment within 10 days of the invoice date.
Cash collected in April from customers
Within discount
March sale = (200,000 -2%of 200,000)*20%
= 196,000*20%
= $39,200
April sale = (180,000 - 2%of 180,000)*40%
= 176,400*40%
= $70,560
Beyond discount
March sale = 200,000*10%
= 20,000
April sale = 180,000*25%
= 45,000
Therefore total cash payment received will be
= 39,200 + 70,560 + 20,000 + 45,000
= $174,760
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