Coranado Company purchases $70,000 of inventory from a wholesaler who allows 45 days to pay. In addition, the wholesaler offers a 3% discount if payment is made within 12 days. These payment terms would be expressed as:

a. n/45, 3/12.

b.0.03/12, n/45.

c. n/45, 0.03/12.

d.3/12, n/45.

The correct answer is option (d).

Explanation:

According to the scenario, computation of the given data are as follows:

Total purchases = $70,000

Total number of days to pay = 45 days

Total discount = 3%

Discount period = 12 days

So, payment terms can be shown as:

Total discount / Discount period and n / Total number of days to pay

By putting the value, we get

= 3/12 and n/45

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