Problema Solution
Diane's Pottery Shop orders china from a supplier for $240 including $30 freight charges. The terms of sale are 3/10, n/30 ROG. The china arrives on 11/21 and Diane wants to take advantage of the cash discount.
a. By what date must the invoice be paid to take advantage of the discount?
Do not abbreviate the name of the month.
b. As the bookkeeper for Diane's how much will you send the supplier?
$
Answer provided by our tutors
3/10, n/30 ROG means that buyers can take a 3% discount within 10 days after receipt of goods. Full amount is due between day 11 and day 30 if cash discount period is missed.
With the receipt of goods (ROG) the cash discount period begins when buyer receives goods, not the invoice date.
a. By what date must the invoice be paid to take advantage of the discount?
Do not abbreviate the name of the month.
10 days after 11/21 that is 21th of November is 1 of December.
To take advantage of the discount the invoice must be paid by 1st of December.
b. As the bookkeeper for Diane's how much will you send the supplier?
Freight must be subtracted from the gross before calculating a cash discount
(240 - 30)(1 - 0.03) = 210*0.97 = $203.7