Exam 11: Discounts: Trade and Cash

Ed's Print Shop received an invoice dated May 10 for $2,500 with terms 3/10, 1/15, n/60. On May 22, Ed's Print Shop sent a partial payment of $2,000. What is the actual amount that should be credited, and what is Ed's Print Shop's outstanding balance? Amount credited: $2,020.20; Outstanding balance: $479.80

List price * trade discount rate = amount of trade discount.

The credit period is:

Morgan Company received from Lee Company an invoice dated September 27. Terms were 2/10 EOM. List price on the invoice was $5,000 (freight not included). Morgan receives a 9/7 chain discount. Freight charges are Morgan's responsibility, but Lee agreed to prepay the $150 freight charge. Morgan pays the invoice on November 9. What does Morgan pay Lee?

Which option yields the highest single equivalent discount?

A radio with a net price of $700 and a trade discount rate of 30% has a list price of $1,000.

Brooks Dept. Store bought a stereo from a wholesaler with a $1,200 list price and a 28% trade discount. What is the trade discount amount? What is the net price of the television?

Invoice: $1,000 Terms: 3/10, n/30 Invoice date: May 5 Payment amount: $800 Date paid: May 9 A) Amount credited: _______ B) Balance outstanding: _____

If a manufacturer's list price is $800 and Bill's Outlet buys the goods for $650, what is the trade discount percent? (Round answer to the nearest hundredth percent.)

Those making partial payments are not allowed to take a cash discount.

A manufacturer of ice skates offered a chain discount of 7/5/1. Bobby's Sport Shop ordered 30 pairs of skates that had a list price of $925. What was the amount of the trade discount?

Amount of trade discount equals:

Cash discounts are not taken on freight or returned goods.

Trade discounts represent increases to the purchase price.

Sometimes the seller will prepay the freight if it is FOB destination.

Net price times single equivalent discount rate equals amount of trade discount.

Cash discounts are:

Gross invoice (includes freight): $1,000 Freight: $100 Date of invoice: 8/11 Terms: 2/10, 1/15, n/30 Date of payment: 8/23 A) Discount: _______ B) Net price: _______