pex Consulting recently received two invoices, which were subsequently paid. The amounts, terms, invoice dates, and the dates the payments were made are shown below. Based on this information, determine the amounts of the payments that would have been made to settle the bills. For full marks your answer(s) should be rounded to the nearest cent.

Click here for help computing the number of days between two dates.


Invoice Amount 2063.78     7174.84

Credit Terms    3.50/15 n/25      1,25/15 n/25

Invoice Date   september 11 june 11

Payment Date   september 28 june 23

Payment


To determine the payment amounts for the two invoices, we will calculate whether the payments were eligible for discounts based on the credit terms and the number of days between the invoice date and the payment date. Let's review the details and perform the necessary calculations for each invoice.

### Invoice Details

1. **Invoice 1:**
   - **Invoice Amount:** $2,063.78
   - **Credit Terms:** 3.50/15, n/25
   - **Invoice Date:** September 11
   - **Payment Date:** September 28

2. **Invoice 2:**
   - **Invoice Amount:** $7,174.84
   - **Credit Terms:** 1.25/15, n/25
   - **Invoice Date:** June 11
   - **Payment Date:** June 23

### Credit Terms Explanation

- `3.50/15, n/25`: 3.50% discount if paid within 15 days; full payment due within 25 days.
- `1.25/15, n/25`: 1.25% discount if paid within 15 days; full payment due within 25 days.

### Invoice 1 Calculation

1. **Calculate Days Between Invoice Date and Payment Date:**
   - Invoice Date: September 11
   - Payment Date: September 28
   - Days between: $28 - 11 = 17$ days

2. **Check Discount Eligibility:**
   - Discount period: 15 days
   - Payment was made 17 days after the invoice date, which is outside the discount period.

3. **Payment Amount:**
   - Since the payment was made after the discount period, the full invoice amount is due.
   - **Payment Amount** = $2,063.78

### Invoice 2 Calculation

1. **Calculate Days Between Invoice Date and Payment Date:**
   - Invoice Date: June 11
   - Payment Date: June 23
   - Days between: $23 - 11 = 12$ days

2. **Check Discount Eligibility:**
   - Discount period: 15 days
   - Payment was made 12 days after the invoice date, which is within the discount period.

3. **Calculate Discount and Payment Amount:**
   - **Discount Rate:** 1.25%
   - **Discount Amount:** $7,174.84 \times \frac{1.25}{100} = 89.6855$
   - **Discounted Payment Amount:** $7,174.84 - 89.6855 = 7,085.1545$

4. **Round to the Nearest Cent:**
   - **Payment Amount** = $7,085.15

### Summary of Payment Amounts

- **Payment for Invoice 1:** $2,063.78 (full amount, no discount)
- **Payment for Invoice 2:** $7,085.15 (with discount applied)

These amounts reflect the calculations based on the given credit terms and payment dates. If you need any further assistance or explanations, feel free to ask!

### Related Questions

1. How can businesses optimize cash flow management through invoice discounts?
2. What are some methods to encourage clients to pay invoices early?
3. How do credit terms affect a company’s financial planning?
4. What are potential risks of offering early payment discounts?
5. How can payment terms impact customer relationships?
6. What strategies can be used to manage accounts payable effectively?
7. How does the time value of money influence invoice payment decisions?
8. What are the benefits and drawbacks of offering multiple discount periods?

### Tip

To take advantage of discounts, always track invoice dates and terms carefully, and set up reminders for payment deadlines to maximize savings and manage cash flow effectively.

Learn how to calculate payment amounts for invoices using discount terms. This page provides step-by-step solutions for determining payment amounts based on invoice dates, payment dates, and credit terms. Includes examples with detailed calculations and explanations.

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