A supplier invoice of $74,500 carries terms 1.5/10, net 30. If paid in the discount period, what check amount should be issued?
Correct Answer
B) $73,382.50
The discount is 1.5% of $74,500, or $1,117.50.
Why This Is the Correct Answer
The discount is 1.5% of $74,500, or $1,117.50.
Why the Other Options Are Wrong
Option A: $72,890.00
$72,890.00 is below the supported result for purchase discount; it likely uses the wrong base, period, or account bucket.
Option C: $73,755.00
$73,755.00 is above the supported result for purchase discount; it likely adds an unsupported amount or compares the wrong financial base.
Option D: $74,500.00
$74,500.00 is above the supported result for purchase discount; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Dollars and check live in different drawers; Payable Reviewed tells which opens.
Reference Hint
Open-book path: tab Builder's Guide to Accounting, 2001 to Section Two, Check Writing and Recording, Paying Accounts Payable; use the job ledger figures in the stem and recompute the same accounting measure.
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