Question

Lifestyle received an invoice on March 15 from its supplier. The net total for an armchair was $575 and payment terms stated 4/15, 1/20 and n/30. What is the Cash Discount if they pay it on March 21st?

Answer 1

Befor explaining the uestion I would like to explain you about this discount. For example 1/20 means that if you make the payment within 20 days frm the invoice date, you will be gettng 1% discount.

So, In the question, it gives multiple discounts for differrent number of days from the invoice date.

First we have to count from March 15 to March 21. It’s 6 days.

So it is within 15 days from March 15 (invoce date). So the discount yhat tou will get is 4%.

Discount = 575 x (4/100)

               = $ 23

Answer 2

Discount: Discounts are the reductions or allowances in the basic prices of goods or services.

The question says,

Three different payment terms. 4/15, 1/20, n/30

That is,

If the amount is paid within 15 days, then the discount will be 4 percent.

If the amount is paid within 20 days, then the discount will be 1 percent.

If the amount is paid within 30 days, then the discount is n.

Invoice issued on March 15.

Bill paid on March 21.

Paid in 6 days.

And so, will get 4 percent discount.

Cash discount = 575 x (4/100) 

Cash discount if they pay it on March 21st = $ 23