Question

Jacob Co. sells merchandise on account to Isaiah Co. for $10,000. The invoice is dated on May 1 with terms of 2/15, net 45. What is the discount, and up to what date must the invoice be paid in order for the buyer to take advantage of the discount? Oa. $400, May 16 Ob. $400, May 15 Oc. $200, May 16 Od $200, May 15

Answer 1

Solution: Option C

i.,e $200, May 16

Explanation:

invoice amount = $10,000

Invoice date = May 1st

Invoice duedate = May 16th

Payment Terms = 2/15 , net 45

Dicounting period = 15days

Date of Invoice Payment	Number of days before paying	Early payment discount	Discount amount	Payment amount due
May 1 Through 16	0-15	2%	$200 ($10,000*2/100)	$9,800

Meaning of 2/15, Net 45

2/15 net 45 is a term that means buyers are eligible to receive a 2% discount on trade credit, if the amount due is paid within 15 days . after the first 15 days , the full invoice amount is due in 45 days without the 2% discount according to the terms for 2/15 net 45.

*Begin counting days from the day after the invoice date.