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    Or Sales Discount (POV of Owner)

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    JANNA CELESTINE L. LEDESMA
    The document discusses different types of discounts including trade discounts and cash discounts. It provides examples of how to calculate trade discount amounts and net prices, defines credit terms used for cash discounts, and provides sample problems applying both trade and cash discounts to transactions. Sample problems include calculating discount amounts, net prices, and payment amounts based on the date of payment and credit terms provided. Exercises at the end provide additional practice applying these discount concepts.

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    Or Sales Discount (POV of Owner)

    Uploaded by

    JANNA CELESTINE L. LEDESMA
    89 views3 pages
    The document discusses different types of discounts including trade discounts and cash discounts. It provides examples of how to calculate trade discount amounts and net prices, defines credit terms used for cash discounts, and provides sample problems applying both trade and cash discounts to transactions. Sample problems include calculating discount amounts, net prices, and payment amounts based on the date of payment and credit terms provided. Exercises at the end provide additional practice applying these discount concepts.

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    Trade Discount definition, types, and examples

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    Trade Discount

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    The document discusses different types of discounts including trade discounts and cash discounts. It provides examples of how to calculate trade discount amounts and net prices, defines credit terms used for cash discounts, and provides sample problems applying both trade and cash discounts to transactions. Sample problems include calculating discount amounts, net prices, and payment amounts based on the date of payment and credit terms provided. Exercises at the end provide additional practice applying these discount concepts.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    89 views3 pages

    Or Sales Discount (POV of Owner)

    Uploaded by

    JANNA CELESTINE L. LEDESMA
    The document discusses different types of discounts including trade discounts and cash discounts. It provides examples of how to calculate trade discount amounts and net prices, defines credit terms used for cash discounts, and provides sample problems applying both trade and cash discounts to transactions. Sample problems include calculating discount amounts, net prices, and payment amounts based on the date of payment and credit terms provided. Exercises at the end provide additional practice applying these discount concepts.

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    of 3

    Understanding Discounts

    Using Trade Discount


    - Solving for Trade Discount Amount and NET PRICE
    - Converting Percent to Decimal

    Discount is a reduction made to the price of the merchandise whether bought or sold

    Why give a discount?


    - Encourages customer rebate and loyalty
    - Eliminate old merchandise
    - To aid in the introduction of a new merchandise
    - Can be a method to generate more income than regular priced items

    Types of Discount
    A. Trade Discount
    - A discount granted from the list price of the merchandise
    - As the name suggest, done during the buying of merchandise or selling of it, depending on which point of view is taken into
    consideration

    Terms:
    List Price - monetary value of the merchandise
    Trade Discount Amount - value of the discount to be deducted of the list price
    Net Price - the price of the merchandise once trade discount is applied

    B. Cash Discount
    - A discount deducted from the price of the merchandise if payment is made early to supplier or collection received from
    customers were done
    - Cash discounts are granted for transactions that were previously done on “Account” basis whether as Purchase Discount
    or Sales Discount (POV of owner)
    - Cash discounts are expressed in the form of credit term

    Credit Term
    - Presents the available cash discount within a given period
    - Example: 1/10, n/30

    Decoding Credit Terms

    2/10, n/30
    - If payment/collection is made within the 10-day period after the date of purchase or sale, a two percent (2%) cash discount
    is granted
    - Beyond the 10 days, no discount is granted.
    - Client has 30 days to settle the account.

    1/15, n/25
    - If payment/collection is made within the 15-day period after the date of purchase or sale, a one percent (1%) cash discount
    is granted
    - Beyond the 15 days, no discount is granted
    - Client has 25 days to settle the account

    2/10, 1/15. n/30


    - If payment/collection is made within the 10-day period after the date of purchase or sale, a two percent (2%) cash discount
    is granted
    - After 10 days, discount is reduced to one percent (1%) for the next 5 days
    - Beyond the 15 days, no discount is granted
    - Client has 30 days to settle the account

    In other words…
    - Numerator: cash discount
    - Denominator: number of days to avail cash discount

    Sample Problems applying Trade Discount


    Ms. Gomez bought a casual shirt worth P2,000 which was granted a discount of 20%.
    Answer the following:
    1. What is the List Price?
    2. How much is the trade discount amount?
    3. How much will Ms. Gomez pay for the shirt?

    Exercise: Solve for the missing elements in the table provided:


    List Price Trade Discount Trade Discount Amt. Net Price
    P90,500.00 35% P31,675.00 P58,825.00
    P7,650.00 10% P765.00 P6,885.00
    P10,165.00 3% P304.95 P9,860.05
    P7,800.00 15% P1,170.00 P6,630.00
    P4,789.00 9% P431.01 P4,357.99
    P5,900.00 5% P295.00 P5,605.00
    P12,850.00 3% P385.50 P12,464.50
    P15,789.00 25% P3,947.25 P11,851.75
    P4,245.00 2.50% P106.13 P4,138.88

    Sample Problems Applying Cash Discount

    On June 1, Ms. Rogers sold a box of merchandise of P10,000 to Ms. Dixon, on account with terms: 2/10, n.30. On June 10, Ms.
    Dixon paid her account.
    Answer the following.
    1. What is the list price?
    2. What is the trade discount?
    3. When did the transaction happen?
    4. Which credit term will apply?
    5. On June 10, how much will miss Dixon pay?

    On October 15, Mr. Jorge purchased P9,000 worth of merchandise from his supplier, on credit. He was granted 10% discount
    and with terms 2/15, 1/20, n/40. Mr. Jorge decided to pay his supplier on November 3.
    Answer the following:
    1. What is the list price?
    2. What is the trade discount?
    3. When did the transaction happen?
    4. Which credit term will apply?
    5. On June 10, how much will Mr. Jorge pay?

    Exercise: define the following credit terms in statement form


    1. 3/10, n/15
    - If payment/collection is made within the 10-day period after the date of purchase or sale, a two percent (3%) cash discount
    is granted
    - After 5 days, no discount is granted.
    - Client has 15 days to settle the account.

    2. 1/15, n/20
    - If payment/collection is made within the 15-day period after the date of purchase or sale, a two percent (1%) cash discount
    is granted
    - After 5 days, no discount is granted.
    - Client has 20 days to settle the account.

    3. 5/15, 2/25, n/30


    - If payment/collection is made within the 15-day period after the date of purchase or sale, a five percent (5%) cash discount
    is granted
    - After 10 days, discount is reduced to two percent (2%) for the next 10 days
    - Beyond the 5 days, no discount is granted
    - Client has 30 days to settle the account
    Exercise: convert the statements into the correct credit terms

    Transaction is good for 35 days. A 3% cash discount is given within a 15 day period after date of sale or purchase. Afterwards, no
    cash discount is given.
    3/15, n/35

    A 2% cash discount is given if payment is made within a 10 day period. After 10 days, 1% cash discount is given for the next five
    days. Transaction is good for 20 days with no more cash discount.
    2/10, 1/15, n/20

    A 1% cash discount is given if payment is made within a 15 day period. No cash discount is given further until the 20 day period.
    1/15, n/20

    Transaction is good for 30 days. If payment is made within the 15 day period after the date of purchase or sale, a 2% cash
    discount is granted. After 15 days, a cash discount of 1% is given if payment is made on the next five days. Beyond the 20 day
    period, no discount is granted.
    2/15, 1/20, n/30

    Exercise: Determine the last day of discount from the given credit term

    Exercise: Solve for what is asked by applying both trade and cash discount.
    Miss Amber Lee bought wholesale, 30 boxes of bullpens worth P5,800 on March 20. She was granted a 2% discount and agreed
    settlement for two months. Terms agreed were 5/30, 3/45, n/60.

    Answered the following:


    1. Solve for the net price
    2. If settlement was made on April 28, how much will Miss Lee pay? Show your answer with supporting details or explanation.

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