Question

Stacy’s Dress Shop received a $1,080 invoice dated July 11 with 5/10, 4/15, n/60 terms. On...

Stacy’s Dress Shop received a $1,080 invoice dated July 11 with 5/10, 4/15, n/60 terms. On July 25, Stacy’s sent a $245 partial payment.
a.

What credit should Stacy’s receive? (Round your answer to the nearest cent.)
  Credit $   
b.

What is Stacy’s outstanding balance? (Round your answer to the nearest cent.)
  Outstanding balance

$   

PLEASE SHOW HOW TO WORK IT OUT
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Homework Answers

Answer #1

(a) The amount of credit that Stacy should receive

The Amount of credit that Stacy should receive

= Partial Payment / [ 100% - Discount rate ]

= $245 / [ 100% - 4% ]

= $245 / 0.96

= $255.21 (Rounded)

* Discount rate of 4% is relevent here, since the partial payment is made within 15 days from the invoice date

“The amount of credit that Stacy should receive = $255.21 (Rounded) “

(b) Stacy’s outstanding balance

Stacy’s outstanding balance = Original Balance – Amount received on partial payment

= $1,080 - 255.21

= $824.79

“ Stacy’s outstanding balance = $824.79 “

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