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Exam 8: Trade and Cash Discounts

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Question 41

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A crdit term of 3 / 15, 2 / 25, N / 45 means you have 25 days from the date of the invoice to receive a 2% discount.

A) True
B) False

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Question 42

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72% is the complement of 27%.

A) True
B) False

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Question 43

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Chain discounts are determined by adding the complements of the chain.

The credit period is always longer than the discount period.

An invoice received from Royal Exporters totaled $638.20, was dated October 10, and offered terms of 1 / 11 ROG. The shipment was received November 27. If the invoice was paid on December 12, find the net amount due.

If the buyer is to pay a transportation charge, the following freight terms would be used:

The method used to calculate the net price when you do not want / need to know the trade discount is called the single discount method.

The store where Anna-Marie is a salesperson offers a trade discount series of 20 / 15 on any clothes bought at the store. Use the single discount equivalent to calculate the trade discount for a $106 sweater.

Credit terms of 2 / 15, ROG means you have 15 days from the receipt of the goods to pay the invoice and take a 2% discount.

Phillip Upton receives a $2,450.00 invoice with credit terms of 3 / 20, 1 / 30, N / 40. A 5 3 / 4% penalty is charged for a late payment. If the invoice is dated May 18 and paid June 27, the amount due is $2,590.88.

Central Airlines offers a trade discount series of 5 / 30 / 10 for frequent flyers. If a round-trip airline ticket is $485, use the single discount equivalent to calculate the trade discount of a round-trip ticket.

The amount of credit that should be received when a partial payment is made is calculated by dividing the partial payment by the complement of the discount.

The difference between the list price and the trade discount is the amount the consumer pays, called the net price.

An invoice for a laptop computer that cost $625.68 is dated September 15, with sales terms of 3 / 10 EOM. If the bill is paid October 8, find the cash discount and net amount paid.

100% minus the single discount rate equals the complement of the discount rate.

FOB Shipping Point means:

The discount price is a catalog price which the manufacturer suggests each product should be sold for to the consumer.

An invoice dated June 28 with terms of 1 / 10, EOM results in the end of the credit period on:

The offer to reduce the amount of an invoice, to encourage prompt payment, is called a trade discount.

An invoice dated June 29, for $1,678.25, with credit terms of 3 / 10, EOM is received by Bailey, Inc. The last day a discount can be taken is: