Question

Your department receives an invoice dated October 10 in the amount of $6,750. How much must be paid on November 10th if the terms are: a) 10/10, net 30 b) 10/10 EOM c) net

Answer 1

Amount if the invoice= $6,750

Date of Invoice= October 10th

Date of Payment= November 10th

a) 10/10 , net 30

It means that the department will receive 10% discount if he pays it within 10 days. Otherwise he have to pay the full amount of the invoice , i.e.$6,750.

Given, the payments are made on 10th November, i.e. within 30 days. So the full amount is paid in the date.

:. Amount that must be paid on November 10 = $6750

b) 10/10 EOM

Here, EOM means end of the month. That means the department will receive 10% discount if it is paid within 10 days following the end of the month ,which is dated on the invoice.

The payment is made on November 10, which is exactly within 10 days after the end of the month of October, on which the bill is dated. So the department will receive 10% discount.

:. The amount that must be paid on November 10th

=6750 - 10%

= 6750 - 675

= $6,075

c) net

Net means that the amount must be fuly paid. There is no discount allowed.

So the amount that must he paid on 10th November =  $6,750