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What is the amount of the trade discount and the trade discount rate?

7– 2 PERFORMANCE OBJECTIVES Section I The Invoice 7-1: Reading and understanding the parts of an invoice 7-2: Extending and totaling an invoice Section II Trade Discounts—Single 7-3: Calculating the amount of a single trade discount 7-4: Calculating net price by using the net price factor, complement method 7-5: Calculating trade discount rate when list price and net price are known© 2009 Cengage Learning. 7– 3 PERFORMANCE OBJECTIVES (cont’d) Section III Trade Discounts—Series 7-6: Calculating net price and the amount of a trade discount by using a series of trade discounts 7-7: Calculating the net price of a series of trade discounts by using the net price factor, complement method 7-8: Calculating the amount of a trade discount by using a single equivalent discount Section IV Cash Discounts and Terms of Sale 7-9: Calculating cash discounts and net amount due 7-10: Calculating net amount due, with credit given for partial payment 7-11: Determining discount date and net date by using various dating methods© 2009 Cengage Learning. 7– 4 The Invoice invoice A document detailing a sales transaction, containing a list of goods shipped or services rendered, with an account of all costs. Net price = List price × Net price factor Net price factor = 100 — 46 = 54% Alternate Method: Net price = 2,800 ( 100% – 46%) = 2,800 ( .54) = 1,512 Net price = 2,800 × .54 = 1,1512© 2009 Cengage Learning. 7– 15 Trade Discount Rate Example A watch has a list price of 9 and can be bought by the jewelry store for a net price of 5.75.

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Some variations of the cash discount terms, among others, may be "2/15, n/30" (2% discount for the payment within 15 days and the full amount to be paid within 30 days) or "n/10 EOM" (the invoice is due and payable 10 days after the end of the month in which the sale occurred). within 10 days of the invoice date, the customer is allowed to deduct (2% of

Some variations of the cash discount terms, among others, may be "2/15, n/30" (2% discount for the payment within 15 days and the full amount to be paid within 30 days) or "n/10 EOM" (the invoice is due and payable 10 days after the end of the month in which the sale occurred). within 10 days of the invoice date, the customer is allowed to deduct $20 (2% of $1,000) from the purchase of $1,000.

shipping point Buyer pays transportation charges from the vendor’s location. Net price = List price – Trade discount net price factor The percent of the list price a business pays for merchandise.

invoice total The final amount due from the buyer to the seller.© 2009 Cengage Learning. 7– 9 Extending and Totaling an Invoice From the following invoice, extend each line to the total column and calculate the invoice subtotal and total: Stock # Quantity Unit Merchandise Description Unit Price Total R443 125 ea. The original price from which discounts are taken.© 2009 Cengage Learning. 7– 11 Trade Discounts – Single (cont’d) net price The amount a business actually pays for the merchandise after the discount has been deducted.

Similar to the Trade discount, this is used when the seller wishes to improve cash flow or liquidity, but finds that the buyer typically is unable to meet the desired discount deadline.

A partial discount for whatever payment the buyer makes helps the seller's cash flow partially. More common with non-profit organizations than with for-profit retail.

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Some variations of the cash discount terms, among others, may be "2/15, n/30" (2% discount for the payment within 15 days and the full amount to be paid within 30 days) or "n/10 EOM" (the invoice is due and payable 10 days after the end of the month in which the sale occurred). within 10 days of the invoice date, the customer is allowed to deduct $20 (2% of $1,000) from the purchase of $1,000. shipping point Buyer pays transportation charges from the vendor’s location. Net price = List price – Trade discount net price factor The percent of the list price a business pays for merchandise. invoice total The final amount due from the buyer to the seller.© 2009 Cengage Learning. 7– 9 Extending and Totaling an Invoice From the following invoice, extend each line to the total column and calculate the invoice subtotal and total: Stock # Quantity Unit Merchandise Description Unit Price Total R443 125 ea. The original price from which discounts are taken.© 2009 Cengage Learning. 7– 11 Trade Discounts – Single (cont’d) net price The amount a business actually pays for the merchandise after the discount has been deducted.Similar to the Trade discount, this is used when the seller wishes to improve cash flow or liquidity, but finds that the buyer typically is unable to meet the desired discount deadline.A partial discount for whatever payment the buyer makes helps the seller's cash flow partially. More common with non-profit organizations than with for-profit retail.

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Some variations of the cash discount terms, among others, may be "2/15, n/30" (2% discount for the payment within 15 days and the full amount to be paid within 30 days) or "n/10 EOM" (the invoice is due and payable 10 days after the end of the month in which the sale occurred). within 10 days of the invoice date, the customer is allowed to deduct $20 (2% of $1,000) from the purchase of $1,000.

shipping point Buyer pays transportation charges from the vendor’s location. Net price = List price – Trade discount net price factor The percent of the list price a business pays for merchandise.

invoice total The final amount due from the buyer to the seller.© 2009 Cengage Learning. 7– 9 Extending and Totaling an Invoice From the following invoice, extend each line to the total column and calculate the invoice subtotal and total: Stock # Quantity Unit Merchandise Description Unit Price Total R443 125 ea. The original price from which discounts are taken.© 2009 Cengage Learning. 7– 11 Trade Discounts – Single (cont’d) net price The amount a business actually pays for the merchandise after the discount has been deducted.

Similar to the Trade discount, this is used when the seller wishes to improve cash flow or liquidity, but finds that the buyer typically is unable to meet the desired discount deadline.

A partial discount for whatever payment the buyer makes helps the seller's cash flow partially. More common with non-profit organizations than with for-profit retail.

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Some variations of the cash discount terms, among others, may be "2/15, n/30" (2% discount for the payment within 15 days and the full amount to be paid within 30 days) or "n/10 EOM" (the invoice is due and payable 10 days after the end of the month in which the sale occurred). within 10 days of the invoice date, the customer is allowed to deduct $20 (2% of $1,000) from the purchase of $1,000. shipping point Buyer pays transportation charges from the vendor’s location. Net price = List price – Trade discount net price factor The percent of the list price a business pays for merchandise. invoice total The final amount due from the buyer to the seller.© 2009 Cengage Learning. 7– 9 Extending and Totaling an Invoice From the following invoice, extend each line to the total column and calculate the invoice subtotal and total: Stock # Quantity Unit Merchandise Description Unit Price Total R443 125 ea. The original price from which discounts are taken.© 2009 Cengage Learning. 7– 11 Trade Discounts – Single (cont’d) net price The amount a business actually pays for the merchandise after the discount has been deducted.Similar to the Trade discount, this is used when the seller wishes to improve cash flow or liquidity, but finds that the buyer typically is unable to meet the desired discount deadline.A partial discount for whatever payment the buyer makes helps the seller's cash flow partially. More common with non-profit organizations than with for-profit retail.

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shipping point Buyer pays transportation charges from the vendor’s location. Net price = List price – Trade discount net price factor The percent of the list price a business pays for merchandise.

invoice total The final amount due from the buyer to the seller.© 2009 Cengage Learning. 7– 9 Extending and Totaling an Invoice From the following invoice, extend each line to the total column and calculate the invoice subtotal and total: Stock # Quantity Unit Merchandise Description Unit Price Total R443 125 ea. The original price from which discounts are taken.© 2009 Cengage Learning. 7– 11 Trade Discounts – Single (cont’d) net price The amount a business actually pays for the merchandise after the discount has been deducted.

Similar to the Trade discount, this is used when the seller wishes to improve cash flow or liquidity, but finds that the buyer typically is unable to meet the desired discount deadline.

A partial discount for whatever payment the buyer makes helps the seller's cash flow partially. More common with non-profit organizations than with for-profit retail.

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