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On July 1, the company receives an invoice for $800 with the terms 1/10, net 30. On July 15 , the payment should be

Question

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Solution

Step 1: Break Down the Problem

  1. Identify the invoice amount: $800.
  2. Understand the payment terms: 1/10, net 30.
    • This means a 1% discount is available if payment is made within 10 days.
    • Otherwise, the total amount is due in 30 days.

Step 2: Relevant Concepts

  • Calculation of discount: Discount=Invoice Amount×Discount Rate \text{Discount} = \text{Invoice Amount} \times \text{Discount Rate}
  • Payment amount after discount: Payment Amount=Invoice AmountDiscount \text{Payment Amount} = \text{Invoice Amount} - \text{Discount}

Step 3: Analysis and Detail

  1. Determine the date of payment:

    • Invoice date: July 1
    • Payment date: July 15 (within the 10-day period).
  2. Calculate the discount: Discount=800×0.01=8 \text{Discount} = 800 \times 0.01 = 8

  3. Compute the payment amount: Payment Amount=8008=792 \text{Payment Amount} = 800 - 8 = 792

Step 4: Verify and Summarize

  • Since the payment is made within the discount period, the discount applies.
  • The calculations confirm that the total amount due after applying the discount is $792.

Final Answer

The payment on July 15 should be $792.

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