Answer:
Chuck receive $589.74 for his partial payment
Explanation:
Let's begin by doing the definition of each concept:
invoice: commercial document which indicates the products, quantities, and prices in a transaction. It is issued duplicate by the seller, who keeps the duplicate, to the buyer, who retains the original.
commercial terms:
2 1/2 /10 the first term is a discount so it will be 2.5%
the second term refers to the ammount of days this discount will be available. In this case during the first 10 days of the sales.
n/30 n refers to nominal ammount, this means no discount will be apply
here the second term stay also the ammount of days this condition will apply, after 30 days the sale will generate interest.
800 pounts x $.85 each equals to $680
partial payment of $575
if there is a 2.5% discount this means the 575 represent the 1 - 0.025 of the nominal
so $575 payment after discount --> .975
nominal - -> 1
Doing the cross-multiply you get $575/0.975 = $589.74
so resuming the formula will be:
[tex]\frac{PartialPayment}{1-DiscountRate}[/tex]
Chuck receive a credit of $589.74 for his partial payment
The entry In Chuck Accounting will be
Account Payable 589.74 debit
Purchase Discount 14.74 credit
Cash 575 credit
The seller will do the entry like this:
Cash 575 debit
Sales Discount 14.74 debit
Account receivable (CHUCK) 589.74 credit
That's why the question state that Chuck is receiving a credit, because it is the other company which acept the payment and perform this discount
