Homework Help is Here – Start Your Trial Now!
Business
Accounting
A trade credit bill of $80,000 with terms of sale of 2/5, net 30 means the buyer saves if the bill is paid within the discount period A:1600 How much discount will a buyer receive if the buyer pays a trade credit bill of $60,000 with terms of sale of 2/5. net 30 on the net due date? A: 0

A trade credit bill of $80,000 with terms of sale of 2/5, net 30 means the buyer saves if the bill is paid within the discount period A:1600 How much discount will a buyer receive if the buyer pays a trade credit bill of $60,000 with terms of sale of 2/5. net 30 on the net due date? A: 0

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
### Understanding Trade Credit Terms and Discounts #### Example 1: A trade credit bill of $80,000 with terms of sale of 2/5, net 30 means the buyer saves ______ if the bill is paid within the discount period. **Answer: $1,600** *Explanation:* - "2/5" means a 2% discount is available if the invoice is paid within 5 days. - "Net 30" means the full payment is due within 30 days if the discount is not taken. - To find the discount amount: - Calculate 2% of $80,000. - $80,000 * 0.02 = $1,600. #### Example 2: How much discount will a buyer receive if the buyer pays a trade credit bill of $60,000 with terms of sale of 2/5, net 30, on the net due date? **Answer: $0** *Explanation:* - If the buyer pays on the net due date (Day 30), the discount period has already expired. - Therefore, no discount is available, and the buyer must pay the full $60,000.
Transcribed Image Text:### Understanding Trade Credit Terms and Discounts #### Example 1: A trade credit bill of $80,000 with terms of sale of 2/5, net 30 means the buyer saves ______ if the bill is paid within the discount period. **Answer: $1,600** *Explanation:* - "2/5" means a 2% discount is available if the invoice is paid within 5 days. - "Net 30" means the full payment is due within 30 days if the discount is not taken. - To find the discount amount: - Calculate 2% of $80,000. - $80,000 * 0.02 = $1,600. #### Example 2: How much discount will a buyer receive if the buyer pays a trade credit bill of $60,000 with terms of sale of 2/5, net 30, on the net due date? **Answer: $0** *Explanation:* - If the buyer pays on the net due date (Day 30), the discount period has already expired. - Therefore, no discount is available, and the buyer must pay the full $60,000.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Trade Credit
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS