The owner of Knighton Hardware store received an invoice for $145 from Coleman for a case of lanterns he purchased. The terms on the invoice read, "4/10, n/20." The next day the hardware storeowner sent Coleman a payment of $139.20. The $5.80 he subtracted from his bill is an example of a _____
discount.
A) seasonal
B) cash
C) cumulative quantity
D) noncumulative quantity
E) trade

Question

The owner of Knighton Hardware store received an invoice for $145 from Coleman for a case of lanterns he purchased. The terms on the invoice read, "4/10, n/20." The next day the hardware storeowner sent Coleman a payment of $139.20. The $5.80 he subtracted from his bill is an example of a _____
 discount.
A) seasonal
B) cash
C) cumulative quantity
D) noncumulative quantity
E) trade

Quizplus · Accepted Answer

The $5.80 subtracted from the bill is an example of a cash discount, which is a reduction in the invoice price given by the seller to the buyer for paying early. The terms "4/10, n/20" mean the buyer can take a 4% discount if the invoice is paid within 10 days; otherwise, the net (full) amount is due in 20 days. The owner took advantage of this by paying less.

The Owner of Knighton Hardware Store Received an Invoice for $145