Question

Ace Formalwear buys tuxedos from a supplier and has an invoice amount of $27,700. The terms of the sale are 3/20, n/30. If Ace sends a partial payment of $7,400 on the discount date, what is the net amount still due?

Answer 1

Cash discount practices vary.
Some expect <i>full</i> payment within the specified date to qualify for the discount, some will discount the paid amount.

I assume the latter given the nature of the question.

3/20 means 3% discount on amount paid within 20 days, and the remainder due on the 30th day.

If $7400 was remitted within 20 days, the amount payable is reduced by
$7400/(100-3%)= $7628.87
So outstanding amount payable
= $27700-$7628.87
= $ 20071.13

Answer 2

On August 18, Sullivan Company received an invoice in the amount of $6,700, having terms of sale of 4/15 EOM. What is the discount date?