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

Credit Terms

Invoice Date

Payment Date

Payment

$2,063.783.50/15, n/25September 11September 280.00$7,174.841.25/15, n/25June 11June 230.00

To determine the payment amounts made to settle the invoices based on the given credit terms and payment dates, we need to understand the credit terms and calculate any applicable discounts. Let's analyze the details for each invoice.

### Invoice 1

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

### 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

The credit terms `3.50/15, n/25` mean:
- **3.50% discount** if the invoice is paid within **15 days**.
- **Net (full) amount** is due within **25 days**.

Similarly, the credit terms `1.25/15, n/25` mean:
- **1.25% discount** if the invoice is paid within **15 days**.
- **Net (full) amount** is due within **25 days**.

### Payment Calculations

#### Invoice 1 Calculation

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

2. **Determine if the discount applies**:
   - The payment was made 17 days after the invoice date.
   - The discount period is 15 days.
   - Therefore, the discount does **not** apply.

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

#### Invoice 2 Calculation

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

2. **Determine if the discount applies**:
   - The payment was made 12 days after the invoice date.
   - The discount period is 15 days.
   - Therefore, the discount **does** apply.

3. **Calculate the discount and the payment amount**:
   - Discount Rate: 1.25%
   - Discount Amount = $7,174.84 \times \frac{1.25}{100} = $89.6855

4. **Calculate the discounted payment amount**:
   - Payment Amount = Invoice Amount - Discount Amount = $7,174.84 - $89.6855 = $7,085.1545

5. **Round the payment amount 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)

If you have any further questions or need additional details, feel free to ask!

### Related Questions

1. How do credit terms affect cash flow management for a company?
2. What are some strategies to ensure invoices are paid within the discount period?
3. How do companies decide on offering specific credit terms to clients?
4. What are the consequences of not paying an invoice within the credit period?
5. How can a company negotiate better credit terms with suppliers?
6. What is the impact of discounts on a company’s profit margin?
7. How does the time value of money influence decisions on early payment discounts?
8. What are some software tools that can help manage invoice payments effectively?

### Tip

Always check the credit terms carefully and keep track of due dates to take advantage of potential discounts and avoid late payment fees.

Learn how to calculate payments for invoices using credit terms and payment dates. This problem involves understanding financial mathematics concepts such as discounts and days calculation. Detailed solutions provided for each invoice example.

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