An invoice is dated July 12 for $6,560 with terms of 3/15, net 60, 2.75% per month penalty. If the invoice is paid on September 13, 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 September 13 for an invoice dated July 12, we need to account for the discount period and any penalties for late payment. Here's a step-by-step breakdown of the process:

### Step 1: Determine the Discount Period
The terms are 3/15, net 60. This means:
- 3% discount if paid within 15 days.
- Full amount due in 60 days.

The invoice date is July 12:
- The discount period ends on July 27 (July 12 + 15 days).

### Step 2: Calculate the Due Date
The net amount is due in 60 days from July 12:
- The due date is September 10 (July 12 + 60 days).

### Step 3: Identify the Payment Date
The invoice is paid on September 13:
- This is 3 days past the due date.

### Step 4: Calculate the Penalty for Late Payment
The penalty rate is 2.75% per month for late payment. Since the payment is 3 days late, we need to calculate the daily penalty rate:
- Monthly penalty rate: 2.75%
- Daily penalty rate: $ \frac{2.75\%}{30} \approx 0.0917\% $

Now, calculate the penalty for the 3 days late:
- Total penalty rate for 3 days: $ 0.0917\% \times 3 \approx 0.2751\% $
- Penalty amount: $ \$6,560 \times 0.002751 \approx \$18.05 $

### Step 5: Calculate the Total Payment Amount
The total amount due includes the original invoice amount plus the penalty:
- Original amount: \$6,560
- Penalty: \$18.05

Total payment amount:
\[ \$6,560 + \$18.05 = \$6,578.05 \]

### Final Answer
The payment amount required to pay the entire balance on September 13 is:
\[ \text{Payment} = \$6,578.05 \]

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 3?
4. What is the effective annual penalty rate if the monthly penalty is 2.75%?
5. How do payment terms like 3/15, net 60 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 required for an invoice dated July 12 with terms of 3/15, net 60 and a penalty of 2.75% per month if paid on September 13. Includes step-by-step breakdown and penalty calculation formula.

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