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# Math help from the Learning Centre

This guide provides useful resources for a wide variety of math topics. It is targeted at students enrolled in a math course or any other Centennial course that requires math knowledge and skills.

## Payment Terms and Cash Discounts

An invoice for the goods is sent, and the seller specifies payment terms on the invoice. This lesson includes:

• Reading of invoice dates;
• Calculating timeline for the end of discount and credit periods
• Ordinary, End-on-the-month, and Receipt of Goods Dating
• Partial Payments

The business selling the goods can offer a cash discount to encourage prompt payment

## Ordinary Dating

Ordinary dating, whereby payment terms are based on the invoice date.

Example

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:

i.February 3;
ii.February 14;
iii.When is the end of the credit period?

Solution

See the video below.

## End-of-the-month Dating

End-of-month dating, or E.O.M. dating. The invoice date is shifted to the last day of the month.

Determine the payment needed to settle an invoice with a net amount of \$750, dated January 26, terms 2/10 E.O.M. paid on February 10.

## Receipt-of-Goods Dating

Receipt-of-goods dating, or R.O.G. is used when the transportation of the goods takes a long time.

A distributor received an invoice of \$3240 dated July 10, terms 3/10, n/30 R.O.G., for a shipment of goods that arrived on November 14. When is the last day for taking the cash discount and how much is to be paid if the discount is taken?

## Partial Payment

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.

Example

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?

payment of \$980 on July 8 will reduce the debt by \$1000.

II. to \$1000?

payment of \$2665.60 on July 8 will reduce the debt to \$1000.

Designed by Matthew Cheung. This work is licensed under a Creative Commons Attribution 4.0 International License.
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