Question

Floors, Inc. offers terms of 2/10, n/30 to credit customers. Tile Magic Corp. purchased 100 tile cutters with a list price of $20 each on August 5, 2016, on account. Tile Magic Corp. paid the invoice on August 31, 2016. How much sales discount will Floors recognize?

Answer 1

Answer:

$0

Step-by-step explanation:

The term 2/10, n/30 is a credit term and means the following:

2 is the discount percentage being offered by the seller.

10 indicates the number of days (from the invoice date) within which the buyer should pay the invoice in order to receive the stated discount.

n/30 states that if the buyer does not pay the (full) invoice amount within the 10 days to qualify for the discount, then the net amount is due within 30 days after the sales invoice date.

Tile Magic Corp. purchased 100 tile cutters with a list price of $20 each on August 5, 2016.

Tile Magic Corp. paid the invoice on August 31, 2016. which is 26 days after the Invoice was issued.

Per the terms of agreement, the discount is only taken into consideration when the invoice is paid within 10 days of its issuance.

Therefore Tile Magic Corp. will receive no discount from Floors Inc.