Question

An invoice from Overhead Doors to The Lumber Company
had a net price of $12,162.04.
The terms were 5/10, net 30
The invoice was dated April 24 and was paid
May 2.
What was the cash price?

Answer 1

Answer:

$11,553.94

Step-by-step explanation:

To calculate the cash price, we need to consider the discount terms. The terms "5/10, net 30" mean that the buyer can take a 5% discount if payment is made within 10 days, otherwise the full net amount is due within 30 days.

Given:

Net price of the invoice = $12,162.04

Discount rate = 5%

Discount period = 10 days

To find the cash price:

Calculate the discount amount if paid within the discount period.

Subtract the discount amount from the net price.

Discount amount = 5% of $12,162.04

= 0.05 * $12,162.04

= $608.10

Cash price = Net price - Discount amount

= $12,162.04 - $608.10

= $11,553.94