cyrus23 said:
A merchant received an invoice for \$7000 with credit terms of 7/10, 4/20, n/30 dated January 4.
Partial payments were made as follows: \$2790 on January 12, and \$1920 on January 21.
Determine the balance due at the end of the month.
You must read the discount terms
very carefully.
It says: 7/10,\;4/20,\;n/30.
\begin{array}{ccc}\text{This means:} & 7\%\text{ discount if paid within 10 days,}\\<br />
& 4\%\text{ discoiunt if paid within 20 days,} \\ <br />
& \text{net (balance) is due within 30 days.} \end{array}
The merchant paid \$2790 on Jan 12.
This is within 10 days; he is entitled to a 7% discount.
The next step is a bit tricky.
He paid \$2790, which is worth: \frac{\$2790}{ 0.93} = \$3000
Then he paid \$1920 on Jan 21.
This is within 20 day; he is entitled to a 4% discouint.
He paid \$1920, which is worth: \frac{\$1920}{0.96} = \$2000
His final balance is: \$7000 - 3000 - 2000 \,=\,\$2000
