On July 1, a company receives an invoice for $800 with the terms 1/10, net 30. On July 15, the payment should be ________
- $692
- $790
- $792
- $800
- $808
The correct answer and explanation is:
The correct answer is: $800
Explanation:
The invoice has payment terms 1/10, net 30. Let’s break this down:
- 1/10: This means the buyer can take a 1% discount if payment is made within 10 days of the invoice date (July 1).
- Net 30: The full amount is due within 30 days (by July 31) if the discount is not taken.
Step-by-Step Calculation:
- The invoice date is July 1.
- The discount period ends 10 days later, which is July 11.
- If the company had paid before or on July 11, they would qualify for a 1% discount: Discount=800×0.01=8\text{Discount} = 800 \times 0.01 = 8 Discounted Price=800−8=792\text{Discounted Price} = 800 – 8 = 792
- However, the company pays on July 15, which is outside the discount period.
- Since the company missed the discount deadline, they must pay the full invoice amount of $800.
Conclusion:
Since the payment is made after July 11, the company does not qualify for the discount and must pay the full $800.
Thus, the correct answer is $800.
Now, I’ll generate an image representing this concept.
Here is the generated image illustrating the invoice payment terms and calculations. This was created using DALL·E, OpenAI’s legacy image generation model. A new model is rolling out soon in ChatGPT for even more refined visuals. Let me know if you need any modifications!
