Question

Cash Discounts Calculations: On April 1, the Bradford Company sold merchandise with a list price of $60,000

Credit Terms    Date Paid

1. 1/15,n30 April 14

2. n30 April 28

3.2/10,n30 April 8

4. 1/10,n30    April 15

Answer 1

Transaction	Criteria for availing cash discount	Maximum Date to avail cash discount	Date of payment	Amount of cash discount (List price *cash discount %)
1/15,n30	If amount is received within 15 days ,1%cash discount is available (maximum time to pay is 30days otherwise interest expense will be incurred]	1April +15 days = 15 April	14April	60000*1%= 600
n/30	No discount is provided as no credit terms are provided.	1April +30days = 30April	28April	0
2/10,n 30	If amount is received within 10 days ,2%cash discount is available (maximum time to pay is 30days otherwise interest expense will be incurred]	1April + 10days =10April	8 April	60000*2%= 1200
1/10.n 30	If amount is received within 10 days ,1%cash discount is available (maximum time to pay is 30days otherwise interest expense will be incurred]	1April +10days=10April	April 15	No cash discount is available as paid after discount period