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Goods are invoiced and shipped on July 1 and received on July 15. Terms are 5/10...

Goods are invoiced and shipped on July 1 and received on July 15. Terms are 5/10 EOM, and the invoice is for $5,600. Payment is made on August 10. How much should be remitted?


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Answer #1

Solution

The Term 5/10 EOM, means a buyer who pays by the 10th of the month following the month of purchase may deduct a 5% discount from the invoice price.if payment is not made within the discount period ,the entire invoice price is due on 11th days of following month.

In the present question,Payment is made on 10th august .ie following the month of purchase .Hence payment is made within time limit allowed to buyer.So a discount @5% is allowed to buyer on invoice price

Hence,Amount to be remitted on august 10 is $5600 - 5% = $5600 - $280 = $5320

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