Question 3. AGM Accounting received an invoice dated Jun 4th. The invoice is for office equipment and the supplier charged AGM $14,000 less 30%, with terms 4/15, n/45, ROG. The furniture arrives on Jul 10th. a) What date is the cash discount valid until? b) How much will AGM have to pay if it takes advantage of the cash discount? c) What date is the credit period valid until?
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question 3. AGM
a) What date is the cash discount valid until?
b) How much will AGM have to pay if it takes advantage of the cash discount?
c) What date is the credit period valid until?
d) Suppose AGM sends a $7,000 cheque for partial payment on Jul 17th. How much does AGM still owe after this payment? Assume the cash discount period has passed and we are still within the credit period.
Hi student
Since there are multiple subparts, we will answer only first three subparts. If you want remaining subparts to be answered, then please resubmit the question and specify the particular subpart to be answered.
Credit terms are terms or conditions used at the time of providing credit services to customers. It defines how customers can take benefit of cash discount and by when, full payment needs to be made out.
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