End Of The Month Research Paper
Interpret and apply end-of-month (EOM) terms.
End-of-month (EOM) terms: a discount is applied if the bill is paid within the specified days after the end of the month. An exception occurs when an invoice is dated on or after the 26th of a month.
For example, the terms might be 2/10 EOM, meaning that a 2% discount is allowed if the bill is paid during the first 10 days of the month after the month in the date of the invoice.
An exception to the EOM rule occurs when the invoice is dated on or after the 26th of the month. When this happens, the discount is allowed if the bill is paid during the first 10 days of the month after the next month. If an invoice is dated May 28 with terms 2/10 EOM, a 2% discount is allowed as long as the bill is paid on or before July 10. This exception allows retailers adequate time to receive and pay the invoice. …show more content…
-How to apply EOM terms:
To an invoice dated before the 26th day of the month:
1.
A cash discount is allowed when the bill is paid by the specified day of the next month.
2. To find the net amount, multiply the invoice amount times the complement of the discount rate.
To an invoice dated on or after the 26th day of the month:
1. A cash discount is allowed when the bill is paid by the specified day of the month after the next month.
2. To find the net amount, multiply the invoice amount times the complement of the discount rate.
EXAMPLE 5
Newman, Inc., received a bill for cleaning services dated September 17 for $5,000 with terms 2/10 EOM. The invoice was paid on October 9. How much did Newman, Inc., pay?
Because the bill was paid within the first 10 days of the next month, a 2% discount was allowed. The complement of 2% is 98%. Thus, 98% is the rate that is paid.
Net amount = 98%($5,000) = 0.98($5,000) =
$4,900
The net amount paid on October 9 is $4,900.
EXAMPLE 6
H-E-B of San Antonio received a $200 bill for copying services dated April 27. The terms on the invoice were 3/10 EOM. The firm paid the bill on June 2. How much did it pay?
Because the bill was paid within the first 10 days of the second month after the month on the invoice, a 3% discount was allowed. The complement of 3% is 97%.
Net amount = 97%($200) = 0.97($200) = $194
The net amount paid was $194.
End-of-month (EOM) terms: a discount is applied if the bill is paid within the specified days after the end of the month. An exception occurs when an invoice is dated on or after the 26th of a month.
For example, the terms might be 2/10 EOM, meaning that a 2% discount is allowed if the bill is paid during the first 10 days of the month after the month in the date of the invoice.
An exception to the EOM rule occurs when the invoice is dated on or after the 26th of the month. When this happens, the discount is allowed if the bill is paid during the first 10 days of the month after the next month. If an invoice is dated May 28 with terms 2/10 EOM, a 2% discount is allowed as long as the bill is paid on or before July 10. This exception allows retailers adequate time to receive and pay the invoice. …show more content…
-How to apply EOM terms:
To an invoice dated before the 26th day of the month:
1.
A cash discount is allowed when the bill is paid by the specified day of the next month.
2. To find the net amount, multiply the invoice amount times the complement of the discount rate.
To an invoice dated on or after the 26th day of the month:
1. A cash discount is allowed when the bill is paid by the specified day of the month after the next month.
2. To find the net amount, multiply the invoice amount times the complement of the discount rate.
EXAMPLE 5
Newman, Inc., received a bill for cleaning services dated September 17 for $5,000 with terms 2/10 EOM. The invoice was paid on October 9. How much did Newman, Inc., pay?
Because the bill was paid within the first 10 days of the next month, a 2% discount was allowed. The complement of 2% is 98%. Thus, 98% is the rate that is paid.
Net amount = 98%($5,000) = 0.98($5,000) =
$4,900
The net amount paid on October 9 is $4,900.
EXAMPLE 6
H-E-B of San Antonio received a $200 bill for copying services dated April 27. The terms on the invoice were 3/10 EOM. The firm paid the bill on June 2. How much did it pay?
Because the bill was paid within the first 10 days of the second month after the month on the invoice, a 3% discount was allowed. The complement of 3% is 97%.
Net amount = 97%($200) = 0.97($200) = $194
The net amount paid was $194.