Answer:
$480.92
Step-by-step explanation:
An invoice from Standard Goods to Wholesale Grocers carried a net price of $9,618.40. The terms were 5/10, net 30. The invoice was dated August 20 and was paid on September 12.
a. The cash price can be calculated by applying the discount terms. Since the terms are 5/10, this means that the buyer can take a 5% discount if payment is made within 10 days. Therefore, the cash price is $9,618.40 minus 5% of $9,618.40:
Cash price = $9,618.40 - (0.05 * $9,618.40)
Cash price = $9,618.40 - $480.92
Cash price = $9,137.48
b. To determine the cost incurred by Wholesale Grocers for paying late, we need to find out how many days late the payment was made. The invoice was dated August 20 and the payment was made on September 12, which means the payment was made 23 days after the invoice date. Since the terms were net 30, the payment was 23 days late.
To calculate the cost of paying late, we find the value of the 5% discount that was not taken:
Discount amount = 5% of $9,618.40
Discount amount = 0.05 * $9,618.40
Discount amount = $480.92
