On August 5 Intel pay $8132 to Bally after deducting all the given discounts.
" Discount is defined as the reduction in the actual price of the product by some percentage or amount."
According to the question,
List price of machinery = $14,000
Conditions given,
Bally dated invoice July 23 with 2/10 EOM terms.
Trade discount given by Intel = 40%
Amount return by Intel on August 1 due to defect = $100
Apply all the conditions to get the actual amount Intel pay Bally on August 5.
Discount amount = 40% of 14,000
= [tex]\frac{(40)(14,000)}{100}[/tex]
= $5,600
Amount after 40% discount = $14,000 - $5,600
= $8,400
2/10 means 2%discount if the amount received within 10 days
Discount amount at 2% = 2% of 8,400
= [tex]\frac{(2)(8400)}{100}[/tex]
= $168
Amount after 2% discount = $8,400 - $168
= $ 8,232
Deduct $100 from the amount = $8,232 - $100
= $8,132
Hence, On August 5 Intel pay $8132 to Bally after deducting all the given discounts.
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