Business Mathematics

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Chapter 7. Invoices, Trade and Cash Discounts.. Topics. 7-1: Reading and understanding the parts of an invoice. 7-2: Extending and totaling an invoice. 7-3: Calculating the amount of a single trade discount7-4: 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. .

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Business Mathematics

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1. Business Mathematics 0 002 002

2. Chapter 7 Invoices, Trade and Cash Discounts.

3. Topics 7-1: Reading and understanding the parts of an invoice. 7-2: Extending and totaling an invoice. 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.

4. Topics 7-6: Calculating net price and trade discount amount 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. 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.

5. Material Hand out Chapter 7 p.203-244 (Contemporary Mathematics for Business and Consumer 4ed: Robert Brechner) quiz 1

6. 7-1: Reading and understanding the parts of an invoice.

7. 7-1: Reading and understanding the parts of an invoice.

11. 7-2: Extending and totaling an invoice. ? Extended = Number of item x Cost per item ? Add all extended ? subtotal ? Calculate subtotal ? Invoice total

12. 7-3: Calculating the amount of a single trade discount trade discount - single Trade Discount “Reduction from manufacturer’s list price given to business” List Price “Suggested retail selling price of an item ,set by manufacturer or supplier.

13. Example What is the amount of the trade discount on merchandise with a list price of $2,800 and a trade discount of 45% ?

14. 7-4: Calculating net price by using the net price factor, complement method. Net price = List price – Trade Discount amount

15. 7-4: Calculating net price by using the net price factor, complement method. Steps to calculate net price by using the net price factor ? Net price factor = 100% - Trade discount percent ? Net price = List price x Net price factor Combine ? + ? Net price = List price x (100% - Trade discount percent)

16. Example Calculate the net price of merchandise listing for $900 less a trade discount of 45%

17. 7-5: Calculating trade discount rate when list price and net price are known. Rate = Portion ? Base

18. 7-5: Calculating trade discount rate when list price and net price are known. Steps to calculate the trade discount rate ? Trade discount amount = List price – Net price

19. Example Oxford manufacturing sells tools to American Garden Supply. In a recent transaction , the list price of an order was $47,750 ,and the net price of the order was $32,100 .Calculate the amount of the trade discount. What was the trade discount rate ? Round your answer to the nearest tenth percent

20. Trade Discount-Series Chain or series trade discount is a term used when a vendor offers a buyer more than one trade discount.

21. 7-6: Calculating net price and trade discount amount by using a series of trade discounts. Finding net price with a series of trade discount by taking each discount one at a time. Use net price factor method.

22. Example Calculate the net price and trade discount amount merchandise with a list price of $2,000 less trade discount of 30/20/15

23. 7-7: Calculating the net price of a series of trade discounts by using the net price factor, complement method. Net price factor is complement of trade discount percent. ? Find the complement of the trade discount in the series by subtracting each from 100% converting to decimal form. ? Calculate the net price factor of the series by multiplying all the decimals together. ? Calculate the net price .

24. Example The Crystal Gallery purchased merchandise from a manufacturer in Italy with a list price of $37,000 less trade discount of 40/25/10. Calculate the net price factor and the net price of the order.

25. 7-8: Calculating the amount of a trade discount by using a single equivalent discount. Single equivalent discount is a single trade discount that equates to all the discounts in a series or chain.

26. Example Calculate Single equivalent discount and amount of the trade discount on merchandise listing for $10,000 ,less trade discount of 30/10/5.

27. Cash discounts and Terms of Sale Terms of Sale is the detail of when an invoice must be paid, and if a cash discount is being offer. Credit period is the time period that the seller allows the buyer to pay the invoice. Net date,due date is the last day of the period credit. Cash discount is an extra discount for early payment of an invoice. Discount date is the last day of the discount period.

28. 7-9: Calculating cash discounts and net amount due. Net amount is the amount of money due from the buyer to the seller.

29. 7-9: Calculating cash discounts and net amount due.

30. STEPS : Calculate cash discounts and net amount date.

31. Example A retailer buys merchandise from a supplier with an invoice amount of $16,000. The terms of sales are 2/10,n/30. What is the amount of the cash discount ? What is the net amount due on this order if the bill is paid by the 10th day ?

32. 7-10: Calculating net amount due, with credit given for partial payment. Partial payment is a portion of the invoice is paid within the discount period? Partial payment credit is the amount of the invoice paid off by the partail payment.

33. STEPS: Calculatie net amount due, and partial payment credit.

34. Example Happy feet, a chain of children’s shoe store, receive an invoice from manufacturer on September 3, with terms of 3/20, n/60. The net price of the order is $36,700. Happy Feet wants to send a partial payment of $10,000 by the discount date and the balance on the net date. How much credit does Happy Feet get for the partial payment ? What is the remaining net amount due to the manufacturer ?

35. 7-11: Determining discount date and net date by using various dating methods. To determine the discount date and net date of an invoice, must know how many days are in each month, or use a calendar

36. STEPS : Determining discount date and net date by using various dating methods. ? Find the “day number” of the starting day. ? Add the number of days of the discount. ? Find the day from step 2

38. Example If an invoice dated April 14 is due in 75 days, what is the net date ?

39. TERM OF SALES – DATING METHODS Ordinary Dating is the discount period and credit period start on the invoice date

40. Example AccuCare Pharmacy receives an invoice from Stering Drug Wholesalers for merchandise on August 19. The terms of sales are 3/10,n/45. If AccuCare elects to take the cash discount, what is the discount date ? If AccuCare does not take the cah discount, what is the last day to pay the bill ?

41. EOM or Proximo Dating EOM is End of Month Dating

42. ROG Dating ROG is the reciepts of goods dating

43. Example a. What are the discount date and the net date of an invoice dated March 3 , with terms of 3/15 EOM ? b. What are the discount date and the net date of an invoice dated March 27 , with terms of 3/15 EOM ? c. What are the discount date and the net date for an invoice dated June 23 , with terms of 3/15 ROG ?

44. Extra Dating Extra Dating is the buyers receives an extra discount period as an incentive to purchase slow-moving or out of season merchandise.

45. Example What are the discount date of an invoice dated February 9 , with terms of 3/15 ,40 extra ?

46. See You next Chapter

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