Question

on march 29, jangles corporation received a $21,800 invoice dated march 26. cash discount terms were $\frac{4}{10},\frac{0}{30}$. on april 02, jangles sent an $8,720 partial payment. required: a. what credit should jangles receive? note: round your answer to the nearest cent. b. what is jangles outstanding balance? note: round your answer to the nearest cent.

Explanation:

Step1: Understand cash - discount terms

The cash - discount terms $\frac{4}{10},\frac{0}{30}$ mean a 4% discount if paid within 10 days and no discount after 10 days. The invoice is dated March 26 and the partial payment is made on April 2 (7 days after the invoice date), so the 4% discount applies.

Step2: Calculate the credit amount

Let the credit amount be $x$. We know that the amount paid is the amount after discount. If the original amount of the credit is $x$, then the amount paid $A$ is related to $x$ by $A=(1 - 0.04)x$. We are given $A = 8720$. So, we can solve for $x$ using the formula $x=\frac{A}{1 - 0.04}$.
$x=\frac{8720}{0.96}\approx9083.33$

Step3: Calculate the outstanding balance

The original invoice amount is $21800$. The credit amount is approximately $9083.33$. The outstanding balance $B$ is $B = 21800-9083.33 = 12716.67$

Answer:

a. $9083.33
b. $12716.67