An invoice for the goods is sent, and the seller specifies payment terms on the invoice. This lesson includes:
The business selling the goods can offer a cash discount to encourage prompt payment
Ordinary dating, whereby payment terms are based on the invoice date.
Example - see the video for the solution
Determine the payment needed to settle an invoice with a net amount of $750, dated January 26, terms of sale is 2/10, 1/20, and n/60, if the invoice is paid
When a business pays part of an invoice within the discount period, the purchaser is entitled to the cash discount on the partial payment paid.
A company has received an invoice of $3720 dated June 28, terms 2/10. What payment must be made on July 8 to reduce the debt
I. by $1000?
A payment of $980 on July 8 will reduce the debt by $1000.
II. to $1000?
A payment of $2665.60 on July 8 will reduce the debt to $1000.