Jacob Co. sells merchandise on credit to Isaiah Co. for $9,700. The invoice is dated May 1 with terms of 1/15, net 45. What is the amount of the discount and up to what date must the invoice be paid in order for the buyer to take advantage of the discount?
a. $194, May 16.
b. $97, May 15.
c. $97, May 16.
d. $194, May 15.

b. $97, May 15

Explanation:

The term 1/15, net 45 means that buyer can take 1% discount on total credit of $9,700 which is $97 within 15 days of sale starting from May 1 and end on May 15 or pay the whole amount within 45 days without discount. Payment made on May 16 will not be eligible for the discount offered. So, the correct option is b. $97, May 15.

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