Credit terms. Purchases made on credit are due in full by the end of the billing

Question

Credit terms. Purchases made on credit are due in full by the end of the billing period. Many firms extend a discount for payment made in the first part of the billing period. The original invoice contains a type of shorthand notation that explains the credit terms that apply. (Note: Assume a 365 day year.) a. Write the shorthand expression of credit terms for each of the following

Cash Discount Cash Discount Period Credit Period Beginning of Credit Period

1% 15 days 45 days Date of invoice

2% 10 days 30 days End of Month

2% 7 days 28 days Date of invoice

1% 10 days 60 days End of Month   

2 10 30 End of month 2 7 28 Date of invoice 1 10 60 End of month

Explanation / Answer

1. 1/15,n/45

2. 2/10,n/30 EOM ( End of Month)

3. 2/7, n/28

4. 1/10, n/60 EOM

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