Question

1. Luggage World buys briefcases with an invoice date of September 28. The terms of sale are 2/10 EOM. What date is the end of the credit period for this invoice?

Answer 1

Given Information:

Invoice Issue date : September 28

Credit term = 2/10 EOM

In Credit term 2 denotes for discount %, 10 depicts for no. of days, and EOM stands End of month.

So it mean following the month of Invoice issue.

Invoice issued in Sept month and following month is October. So it mean payer will get 2% discount if paid with 10 yads of following month. However net credit period is not mentioned in the question so 10 days will be considered as net period also.

2/10 EOM mean get 2% discount if paid within 10 days of following month i.e. october and no more credit period. So payer have to pay on or before 10th october.

So credit period expire if no paid on 10th october.