A Lake City supplier invoice of $157,200 carries terms 2.5/10, net 30. If paid during the discount period, what check amount should be issued?
Correct Answer
B) $153,270.00
The early-payment discount is subtracted from the invoice amount.
Why This Is the Correct Answer
The early-payment discount is subtracted from the invoice amount.
Why the Other Options Are Wrong
Option A: $157,200.00
$157,200.00 is above the supported result for purchase discount; it likely adds an unsupported amount or compares the wrong financial base.
Option C: $154,056.00
$154,056.00 is above the supported result for purchase discount; it likely adds an unsupported amount or compares the wrong financial base.
Option D: $152,484.00
$152,484.00 is below the supported result for purchase discount; it likely uses the wrong base, period, or account bucket.
Memory Technique
Early-Payment and subtracted live in different drawers; Accounts-Payable Run 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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