CH08_PPT- Business Math

7/21/2019 CH08_PPT- Business Math

http://slidepdf.com/reader/full/ch08ppt-business-math 1/44



Business Math , Eighth EditionCleaves/Hobbs

© 2009 Pearson Education, Inc. Upper Saddle iver, !"0#$%& 'll ights eserved

&.( Single )rade *iscounts

+ind the trade discount using a singletrade discount rate -ind the net price using

the trade discount.+ind the net price using the co ple ent o-the single trade discount rate.





e )er sSuggested retail price, catalog price, listprice 1 three co on ter s -or the price hichthe anu-acturer suggests an ite be sold tothe consu er.

Trade discount 1 the a ount o- discount thatthe holesaler or retailer receives o-- the list

price or the di--erence bet een the list price andthe net price





Net price 1 the price the anu-acturer orretailer pa s or the list price inus thetrade discount.

Discount rate 1 a percent o- the list price.

e )er s





3anu-acturer 4holesaler etailer Consu er

Product -lo





Consu er etailer 4holesaler 3anu-acturer

5ist Price !et Price !et Price Cost

6&0 6%7 6$0 620

80 %0 o-- list o-- list

Price -lo





Ho to -ind the trade discount

Using a single trade discount rate 1(. Identi- the single discount rate and the

list price.2. 3ultipl the list price b the single

discount rate.

)rade discount : rate ; list price





5oo< at this e;a ple)rade discount : rate ; list price+ind the trade discount -or a cd pla er thatretails at 6(20 and has a trade discount rate o-

8% .

)rade discount : 0.8% ; 6(20Trade discount = $424hat does the 6$2 ean=)hat the holesaler or retailer ill not pa 6$2o- the 6(20 list price.





)r these e;a ples

+ind the trade discount -or a rug that lists-or 6290 and has a trade discount o- 80 .

$87

+ind the trade discount -or st ling gel thatlists -or 6(& and has a trade discount o-(% .

$2.70





+ind the net price

Using the trade discount1(. Identi- the list price and the trade discount.2. Subtract the trade discount -ro the list

price.

)rade discount : ate ; 5ist Price!et Price : 5ist Price > )rade discount





5oo< at this e;a ple

+ind the net price o- a des< that lists -or6820 and has a trade discount o- 80 .

)rade discount : 0.80 ; 6820 : 697

!et price : 5ist price > )rade discount

Net price = $320 - $ ! = $224





)r these e;a ples

+ind the net price o- a ca era that lists -or62$0 and has a trade discount o- $% .

$"32

+ind the net price o- a patio table that lists-or 6$70 and has a trade discount o- 20 .

$3!8





+ind the net priceUsing the co ple ent o- the single tradediscount rate.

#o ple ent o% percent 1 the di--erencebet een (00 and the given percent.

E;a ples1)he co ple ent o- 80 is #0 .)he co ple ent o- %% is $%)he co ple ent o- % is 9% .





Ho to -ind the net price(. +ind the co ple ent1 subtract the single trade

discount -ro (00 .2. 3ultipl the list price b the co ple ent o- the

single trade discount.

E;a ple1+ind the net price o- a co--ee a<er that lists-or 620 and has a trade discount rate o- 20 .&0 is the co ple ent o- 20N& = $20 ' 0.80 = $"!





)r these e;a ples

+ind the net price o- a set o- gol- clubs thatlists -or 6(,%00 and has a trade discount o-(% .

$"27(

+ind the net price o- a bic cle that lists -or6(02 and has a trade discount o- 80 .

$7".40





&.2 )rade *iscount Series

+ind the net price, appl ing a tradediscount and using the net deci al

e?uivalent.+ind the trade discount, appl ing atrade discount series and using thesingle discount e?uivalent.





)rade discount seriesTrade discount series or c)ain discount 1additional discounts that are deducted one a-teranother -ro the list price.

easons to use discount series include1

)o encourage volu e purchases

)o pro ote special or seasonal ite s)o entice a ne client





)rade discount series step b step 'n ite lists -or 6$00 and has a discount o-20 . 6$00 ; 0.2 : 6&0 6$00 @ 6&0 : 6820

'n additional discount o- (0 is ta<en on theprevious price.6820 ; 0.( : 682 6820 @ 682 : 62&&

'n additional discount o- % is ta<en on theprevious price.62&& ; 0.0% : 6($.$0 62&& @ 6($.$0 : 62#8.70

$273.!0 is t)e %inal price





Can ou add the discountstogether and appl it as one=

I- the ite has three discounts o- 20 , (0and % , can ou add the together and

appl a 8% discount=!o, because each ti e ou appl theadditional discount, the base beco ess aller. *irectl appl ing a 8% discount

ould result in a -inal price o- 6270.$2!0 * $273.!0





)he net deci al e?uivalent

)o -ind the net deci al e?uivalent o- atrade discount series1

(. +ind the net deci al e?uivalent1 ultiplthe deci al -or o- the co ple ent o-each trade discount rate in a series.

2. 3ultipl the list price b the net deci ale?uivalent.





5oo< at this e;a ple+ind the net price o- an order ith a list price o-6&00 and a trade discount series o- 20/(0/%.+ind the co ple ent o- each o- the trade

discount rates.)he are 0.&0, 0.90 and 0.9%.3ultipl the together.)he net deci al e?uivalent is 0.7&$

'ppl the net deci al e?uivalent to the list price.N& = 0.!84 ' $800 = $(47.20





)r these e;a ples

' tool set lists -or 682% and has a tradediscount series o- 20/(0/(0. +ind the netprice.

$2"0.!0

' dress shirt lists -or 6(2% and has a trade

discount series o- (%/(0/#.%. +ind the netprice.

$88.4(





&.2.2 +ind the )rade *iscount

)o -ind the trade discount b appl ing a tradediscount series and using the single discounte?uivalent1

(. +ind the single discount e?uivalent bsubtracting the net deci al e?uivalent -ro A(.B

2. 3ultipl the list price b the single discount

e?uivalent.)* : single discount e?uivalent ; list price





e )er s

Single discount e+ui alent 1 theco ple ent o- the net deci al e?uivalent.It is the deci al e?uivalent o- a singlediscount rate that is e?ual to the series o-discount rates.

Total a ount o% a series o% discounts :

single discount e?uivalent ; list priceNet a ount ou pa : net deci ale?uivalent ; list price






Use the single discount e?uivalent tocalculate t)e trade discount on a 68,200la n tractor ith a discount series o-80/20/(0.+ind the net deci al e?uivalent b

ultipl ing the co ple ents o- each

discount rate. 0.#0 ; 0.&0 ; 0.90 : 0.%0$)o -ind the single discount e?uivalent,subtract the net deci al e?uivalent -ro A(.B





Subtract the net deci al e?uivalent 0.%0$D -roA(B to -ind the single discount e?uivalent.

)he result is 0.$97 or $9.7 D.)he single discount e?uivalent is 0.$97 appl it tothe price o- 68,200.

)* : 68,200 ; 0.$97 : 6(,%&#.20

T)e trade discount on t)e tractor is $",(87.20.T)at is t)e a ount t)at ou do not pa .

5oo< at this e;a ple continuedD





&.8 Cash *iscount andSales )er s

+ind the cash discount and the net a ountusing ordinar dating ter s

Interpret and appl E 3 ter sInterpret and appl F ter s

+ind the a ount credited and theoutstanding balance -ro partial pa entsInterpret -reight ter s





&.8.( +ind the Cash *iscountand the !et ' ount

Gills are o-ten due ithin thirt da s -ro thedate o- the invoice.

)o encourage pro pt pa ent, co panies o--eran incentive o- a cas) discount i- the invoice ispaid ithin a speci-ied period.

A2 "0 n 30B eans Ata<e a 2 cash discount i-paid ithin (0 da s pa the net price i- coveredithin 80 da s.B






+ind the cash discount -or an invoice dated*ece ber ( -or 6(,%00 ith ter s o- 2/(0n/80.

I- the invoice is paid on *ece ber 9 th , -ore;a ple, the pa ent ould include thediscount and the a ount ould be $",470 .

I- the invoice is paid on or a-ter *ece ber(( th , the a ount to pa ould be $",(00 .





)r these e;a ples 'nnie s Plants has received an invoice -or6$%0.00 -or potting soil dated !ove ber 8 ithter s o- %/(0 n/80. I- the invoice is paid on

!ove ber (2, ho uch ould 'nnie s pa =$427.(0

4hat i- the bill is paid on !ove ber 80=

)he ould not be able to ta<e the discount andould have to pa the %ull a ount o% $4(0 .





A)hirt da s has Septe ber B

)o calculate the e;act nu ber o- da s -or a cash

discount, ou ust <no ho an da s are ineac) onth, so i- ou are not sure learn the .

)here are t o tips in the te;t to help ou using achart is usuall the ost reliable.





Use the co ple ent to -ind thenet a ount o- an invoice

'n invoice o- 6%00 hich reads 2/(0 n/80tells ou that a discount o- 2 is available i-

the pa ent is ade ithin (0 da s.)o calculate the net a ount directl , use theco ple ent o- the discount in this case,0.9&D and ultipl it b the total a ount.

$(00 ' 0. 8 = $4 0 = net a ount to /epaid





)r this e;a pleS ca ore Enterprises received a 6(,2$& bill -orco puter supplies dated Septe ber 2 ith sales ter so- 2/(0, (/(%, n/80. ' % penalt is charged a-ter 80da s. +ind the a ount due -or the -ollo ing dates1Septe /er "2, Septe /er "(, cto/er ", cto/er 3 .

Septe ber (2 2 discountD = $",223.04

Septe ber (% ( discountD = $",23(.(2ctober ( no discountD = $",248.00

ctober 8 % penalt D = $",3"0.40





&.8.2 Interpret and 'pplE 3 end@o-@ onthD )er s

'nother t pe o- sales ter are 1 ter s.

+or e;a ple, an invoice ight be 2/ "0 E 3,eaning that a 2 discount is allo ed i- the

bill is paid during the -irst onth or up until "0 da s o- the onth a%ter the onth on the dateo- the invoice.

I- the invoice is dated No e /er " , then the2 discount is allo ed up to and includingDece /er "0 .





5oo< at these e;a ples 'n invoice dated 3arch $ ith ter s o- 8/(%E 3 ould ean that a 8 discount ould beapplicable until 'pril (%.

'n invoice dated 'ugust 2% ith ter s o- %/(0E 3 ould ean that a % discount ould beapplicable until Septe ber (0.

'n invoice dated *ece ber 2 ith ter s o- 2/20E 3 ould ean that a 2 discount ould beapplicable until "anuar 20.





'n E 3 e;ceptionJ

'n e;ception occurs hen the invoice isdated on or a%ter t)e 2!t) o% t)e ont) .

)he discount ould be applicable until thespeci-ied da o- the onth -ollo ing theonth o- the invoice.

1'a ple 1 'n invoice dated 'pril 2# ithter s o- 8/(0 E 3 ould be eligible -or thediscount i- the bill is paid on or be-ore "une(0.





&.8.8 'ppl eceipt o- FoodsFD )er s

' cash discount is allo ed hen the bill is paidithin the speci-ied nu ber o- da s -ro the

receipt o% goods , not -ro the date o- theinvoice.

3ultipl the invoice a ount ti es theco ple ent o- the discount rate.

Sales ter s stating (/(0 F ean that a (discount is applicable "0 da s a%ter t)e goodsare recei ed not hen the invoice is dated.





)r this e;a ple

"ud s +ine "e elr received an invoice -or %0silver char bracelets -or a total o- 6%%0. )heinvoice is dated 'pril (. She received thebracelets on 'pril 7. I- the ter s are 8/(0 Fand the invoice is paid on 'pril ((, ho uch

ill she pa =

$(33.(0





&.8.$ +ind the ' ount Creditedand the utstanding Galance

&artial pa ent 1 a pa ent that does note?ual the -ull a ount o- the invoice less ancash discount.

&artial discount 1 a cash discount applied onlto the a ount o- the partial pa ent.

ount credited 1 the su o- the partialpa ent and the partial discount.

utstanding /alance 1 the invoice a ountinus the a ount credited.





'ppl ing the percentage -or ulaIn appl ing the percentage -or ula to -ind thea ount credited, the rate is t)e co ple ent o- the discount rate the percentage is t)e

partial pa ent and the a ount credited ist)e /ase .

= & 5

So eti es a custo er cannot pa the entirea ount o- an invoice, but ta<es advantage o- adiscount period to appl that discount to a parto- the total due.





5oo< at this e;a pleI- the Se es Corporation received a 6&#% invoice ithter s o- 8/(0 n/80 and could not pa the -ull a ount

ithin (0 da s, but chose to send in a 6%00 partialpa ent on *a %, hat a ount as credited to their

account=G a ount creditedD : P partial pa entD divided b

co ple ent o- the discount rateD

= (00 0. 7= $("(.4! = a ount credited)he balance ould be the di--erence.

$87( - $("(.4! = $3( .(4 = /alance





&.8.% Interpret +reight )er s

ill o% lading 1 shipping docu ent that includesa description o- the erchandise, the nu ber o-pieces, eight, na e o- the consignee senderD,destination, and ethod o- pa ent o- -reightcharges.

6 s)ipping point 1 A-ree on boardB bu er

pa s -or shipping hen ship ent is received.6reig)t collect 1 )he bu er pa s the shipping

hen the shipping is received.





3ore <e ter s

6 destination 1 A-ree on boardB at thedestination point. )he seller pa s the shipping

hen the erchandise is shipped.

6reig)t paid 1 )he seller pa s the shippinghen the erchandise is shipped.

&repa and add 1 )he seller pa s the shippinghen the erchandise is shipped but, the

shipping costs are added to the invoice -or thebu er to pa .



e e ber that cash discountsdo not appl to shipping costs

1'a ple 1 )he Ho e *octor received a ship ent o-hand tools ith an invoice total o- 6&00 includingshippingD and sales ter s o- 8/(0 n/80. )he invoice isdated "une 2 and the shipping costs are 6(2%. Calculatethe pa ent o- the invoice i- it is paid on "une (0.

Subtract the shipping charges1 6&00 > (2% : 67#%

'ppl the discount1 67#% ; 0.9# : 67%$.#%

'dd the shipping charges bac< in1

$!(4.7( "2( = $77 .7(= a ount to /e paid

CH08_PPT- Business Math

Documents