An invoice is dated March 18 for $6,160 with terms of 4/15, net 50, 2% per month penalty. If the invoice is paid on May 11, what payment amount is required to pay the entire balance owing?

For full marks your answer(s) should be rounded to the nearest cent.


Payment = $0.00 


To determine the payment amount required on May 11 for an invoice dated March 18, we need to consider the discount period, the net period, and any penalties for late payment. Here is the detailed calculation process:

### Step 1: Determine the Discount Period
The terms are 4/15, net 50. This means:
- 4% discount if paid within 15 days.
- Full amount due in 50 days.

The invoice date is March 18:
- The discount period ends on April 2 (March 18 + 15 days).

### Step 2: Calculate the Due Date
The net amount is due in 50 days from March 18:
- The due date is May 7 (March 18 + 50 days).

### Step 3: Identify the Payment Date
The invoice is paid on May 11:
- This is 4 days past the due date.

### Step 4: Calculate the Penalty for Late Payment
The penalty rate is 2% per month for late payment. Since the payment is 4 days late, we need to calculate the daily penalty rate:
- Monthly penalty rate: 2%
- Daily penalty rate: $ \frac{2\%}{30} \approx 0.0667\% $

Now, calculate the penalty for the 4 days late:
- Total penalty rate for 4 days: $ 0.0667\% \times 4 \approx 0.2667\% $
- Penalty amount: $ \$6,160 \times 0.002667 \approx \$16.43 $

### Step 5: Calculate the Total Payment Amount
The total amount due includes the original invoice amount plus the penalty:
- Original amount: \$6,160
- Penalty: \$16.43

Total payment amount:
\[ \$6,160 + \$16.43 = \$6,176.43 \]

### Final Answer
The payment amount required to pay the entire balance on May 11 is:
\[ \text{Payment} = \$6,176.43 \]

Would you like more details or have any questions?

Here are 8 related questions to expand your understanding:

1. How is the daily penalty rate calculated from the monthly penalty rate?
2. What are the consequences of missing the discount period on an invoice?
3. How would the penalty change if the payment were 10 days late instead of 4?
4. What is the effective annual penalty rate if the monthly penalty is 2%?
5. How do payment terms like 4/15, net 50 affect cash flow management?
6. Can penalties be negotiated or waived in business transactions?
7. How would the calculation change if the invoice had been paid within the discount period?
8. What are some common strategies businesses use to manage their accounts payable to avoid penalties?

**Tip:** Always review the terms of payment on an invoice to take advantage of any discounts and avoid late penalties.

Learn how to calculate the payment amount for an invoice with terms of 4/15, net 50 and penalties for late payment. Includes detailed step-by-step calculations and formulas for penalty and discount calculations.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation