A contractor receives an invoice dated March 15th with terms of '2/10 net 30'. If the invoice amount is $8,500, what is the payment amount if paid on March 24th?
Correct Answer
C) $8,500.00
The payment terms '2/10 net 30' mean a 2% discount if paid within 10 days, otherwise full amount due in 30 days. Since March 24th is 9 days after March 15th, the 2% discount applies: $8,500 × 0.98 = $8,330.
Why This Is the Correct Answer
There appears to be an error in the provided explanation. The correct answer should be B) $8,330.00, not A) $8,500.00. The payment terms '2/10 net 30' offer a 2% discount if paid within 10 days of the invoice date. Since March 24th is 9 days after March 15th (within the 10-day discount period), the contractor qualifies for the 2% discount. The discounted amount is $8,500 × 0.98 = $8,330.00.
Why the Other Options Are Wrong
Option A: $8,415.00
This amount doesn't correspond to any standard payment term calculation and appears to be an arbitrary figure
Option B: $8,330.00
This represents the full invoice amount without applying the 2% early payment discount that the contractor earned by paying within 10 days
Option D: $8,245.00
CORRECT_ANSWER - This is the proper discounted amount after applying the 2% early payment discount
Memory Technique
Remember '2/10 net 30' as 'Two percent off if you pay in Ten days, otherwise the Net amount is due in Thirty days' - the numbers tell the whole story in order
Reference Hint
Business and Finance chapter covering payment terms, cash discounts, and accounts payable management
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