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Q. Explain about Sales discounts?
Sales discounts when a company sell goods on account it clearly specifies terms of payment on the invoice. For instance the invoice in Exhibit 34 states the terms of payment as net 30. Net 30 are sometimes written as n/30. Either way this term denotes that the buyer may not take a discount and should pay the entire amount of the invoice (USD 20000) on or before 30 days after 2010 December 19 (invoice date)-or 2011 January 18. The terms had read n/10/EOM (EOM means end of month) the buyer could not take a discount as well as the invoice would be due on the 10th day of the month following the month of sale-or 2011 January 10. Credit terms differ from industry to industry.
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Having trouble with word problem: Planned Acquisition cost $2.1M Salvage Value $0 16% discount rate savings = year end Savings: year 1 150k year 2 175k year 3 300K year
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