Question

Bally Manufacturing sent Intel Corporation an invoice for machinery with a $13,200 list price. Bally dated the invoice August 02 with 2/10 EOM terms. Intel receives a 20% trade discount. Intel pays the invoice on August 15. On August 1, Intel Corporation returns $200 of the machinery due to defects. What does Intel pay Bally on August 15?

What is the payable amount?

Answer 1

a. Based on the information the amount that Intel pay Bally on August 15 is $10,400.

b. The payable amount is $10,192.

a. Intel pay Bally on August 15:

First step is to calculate the 20% trade discount applied to gross invoice

20% trade discount applied to gross invoice =($13,200-$200) × 0.2

20% trade discount applied to gross invoice = $13,000×0.2

20% trade discount applied to gross invoice=$2,600

Second step is to calculate Net price after trade discount

Net price after trade discount = ($13,200-$200) - $2,600

Net price after trade discount =$13,000-$2,600

Net price after trade discount = $10,400

b. Payable amount:

Payable amount= $10,400-( $10,400×2%)

Payable amount=$10,400-$208

Payable amount=$10,192

Inconclusion the amount that Intel pay Bally on August 15 is $10,400 and the payable amount is $10,192.

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