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Cash Discount - Modern Business Mathematics | MTH 130, Study notes of Mathematics

Monroe Community CollegeMathematics
Prof. Brigitte Martineau

Material Type: Notes; Professor: Martineau; Class: Modern Business Mathematics; Subject: Mathematics (MTH); University: Monroe Community College; Term: Unknown 1989;

Typology: Study notes

Pre 2010

Uploaded on 08/09/2009

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MTH 130 Modern Business Mathematics
Brigitte Martineau Section 7.2
Page 1 of 4
Cash Discounts
Payment should always be made ASAP
Retailer and manufacturer will offer ____________ discounts, a __________ from net
cost as an incentive to pay earlier.
Look on p. 209 of your book
There are different types of cash discounts
• 2/10, N/30
• 5/10, 2/30, N/60
• 2/10, N/30, EOM
pf3
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Brigitte Martineau Section 7.

Cash Discounts

Payment should always be made ASAP

Retailer and manufacturer will offer ____________ discounts, a __________ from net cost as an incentive to pay earlier.

Look on p. 209 of your book

There are different types of cash discounts

• 2/10, N/

• 5/10, 2/30, N/

• 2/10, N/30, EOM

Brigitte Martineau Section 7.

• 4/10, N/30, ROG

• COD

How to count days? Use of a calendar or use of the knuckles trick

Remember this formula:

Payment = Net Cost * % paid

Let’s practice

  1. The cash discount terms on an invoice for $45,000 dated September 1 are 3/10, 2/20, N/30. Find the time periods, the payments and the discounts for each period.
  2. An invoice for $4600 is dated March 29 with cash discount terms of 3/10, N/32, EOM. List the time periods, as well as the payment and discount for each period.

Brigitte Martineau Section 7.

  1. A retailer received an invoice dated October 30 with cash discount terms of 3/10, N/30 and showing an amount due $9500. On November 8, the retailer made a partial payment of $3880. What was the new balance?
  2. The Flaming Hearth wants to reduce its current balance of $14,000, shown on a July 27 invoice, by $12,000. What payment should be make on August 10 if the cash discount terms on the invoice were 3/10, N/30, EOM?
  3. A retailer purchased a shipment of winter boots with a total list price of $2200 from a wholesaler who offers trade discounts of 20% and 10%. An invoice with cash discount terms of 4/10, N/30, EOM was sent on April 26. What payment should be make on May 8 to completely pay the bill?