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Assume you are a wholesaler. On February 7 you purchase 25items from your supplier, on account, for $12 each, credit terms 1/10, n/25. On February 11 you pay your supplier. On February 15 you sell 15 of these items to a customer, on account, for $15 each, credit terms 4/5, n/20. On February 20 the customer pays the outstanding invoice.
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