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Chapter 5: Q5-9RQ (page 294)

What would the credit terms of “2/10, n/EOM” mean?

Short Answer

Expert verified

The credit term “2/10, n/EOM means that the company can deduct 2% from the bill amount if the payment is made within 10 days.

Step by step solution

01

Meaning of Credit Term

In accounting, credit term refers to the payment terms associated with an invoice, which are mentioned on it. It presents anagreement between the buyer and seller regarding the payments required to be received againstgoods sold on credit.

02

The credit terms of “2/10, n/EOM” mean

The credit terms "2/10, n/EOM" means that the company can avail 2%discount on the total bill due (excluding the freight amount) if it makes the payment within days of the date mentioned on the invoice. In addition, if the company does not make the payment within ten days, then the entire amount will become due at the end of the month.

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Most popular questions from this chapter

Click Computers has the following transactions related to the sale of merchandise inventory.

Mar. 1 Sold a computer (cost of \(3,000) for \)8,000 to a customer. The customer paid cash. The sales price included a one-year service contract valued at $168.

Dec. 31 Recorded the amount of service contract earned.

Journalize the transactions for Click Computers assuming that the company uses the perpetual inventory system.

The adjusted trial balance of Quality Office Systems at March 31, 2018, follows:

When recording purchase returns and purchase allowances under the periodic inventory system, what account is used?

Is an adjusting entry needed for inventory shrinkage when using the periodic inventory system? Explain.

When a company has a contract involving multiple performance obligations, how must the company recognize revenue?
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