The Empire Carpet Company orders merchandise for $17,700, including $550 in shipping charges, from Mohawk Carpet Mills on May 4. Carpets valued at $1,390 will be returned because they are damaged. The terms of sale are 2/10, n30 ROG. The shipment arrives on May 26 and Empire wants to take advantage of the cash discount. By what date must Empire pay the invoice.

Using the scenario from the question above, imagine you are the bookkeeper for Empire. How much money will you send to Mohawk

Question

The Empire Carpet Company orders merchandise for $17,700, including $550 in shipping charges, from Mohawk Carpet Mills on May 4. Carpets valued at $1,390 will be returned because they are damaged. The terms of sale are 2/10, n30 ROG. The shipment arrives on May 26 and Empire wants to take advantage of the cash discount. By what date must Empire pay the invoice. 

Using the scenario from the question above, imagine you are the bookkeeper for Empire. How much money will you send to Mohawk

nurali · Answer

2/10/n30 ROG means Buyer receives a 2% discount if the invoice is paid within 10 days of the date the buyer receives the goods. The net amount is due in 30 days after receipt. ROG= receipt of goods. 

Add 10 days to May 26 (May 26 itself is not counted, so start counting from May 27) and you'll get June 5th. The amount of the discount is [($17,700 - $1,390) x 2%] = $326.20.