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A buyer of $7,300 in merchandise inventory failed to take advantage of the vendor's credit terms...

Question:

A buyer of $7,300 in merchandise inventory failed to take advantage of the vendor's credit terms of 3/15, n/45, and instead paid the invoice in full at the end of 45 days. By not taking advantage of the cash discount, the buyer lost the discount of what amount?

Invoice:

When a company receives an invoice, the date of repayment often includes a discount for early payment. This discount is often assessed by the receiving company to see if the reduced price of paying early is beneficial as compared with paying later and using that cash in other ways.

Answer and Explanation: 1

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The vendor's credit terms of 3/15, n/45 means that there is a 3% discount if the buyer pays the invoice within 15 days with the full amount due within...

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Credit Terms: Due Date, Invoice Date & EOM

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Chapter 7 / Lesson 2
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Understand what credit terms are by learning the credit terms definition. Learn the meaning of the due date and invoice date. Understand the meaning of EOM.


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