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Exam 7: Discounts: Trade and Cash

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Question 41

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A local RadioShack store wants to buy a new line of plasma TVs. Manufacturer A offers chain discounts of 18/12, and Manufacturer B offers terms of 17/13. Which single equivalent discount rate is the best deal?

A) 0.7221: Manufacturer A
B) 0.7216: Manufacturer B
C) 0.2779: Manufacturer A
D) 0.2784: Manufacturer A
E) None of these

F) D) and E)
G) A) and D)

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Question 42

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Trade discounts represent increases to the purchase price.

A) True
B) False

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Question 43

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Which month has 30 days?

Net price times rate of trade discount equals amount of trade discount.

Bill's TV buys a television from a wholesaler with a list price of $600 and a trade discount of 32%. What is the amount of the trade discount and what is the net price of the television?

Calculate the net price and amount of trade discount (use net price equivalent rate as well as single equivalent discount rate): $\begin{array} { | l | l | l | l | l | } \hline\text { Item } & \text { List Price } & \text { Chain Discount } & \text { Net Price } & \text { Trade Discount } \\\hline \begin{array} { l } \text { Troy-Bilt lawn } \\\text { mower }\end{array} & \$ 499 & 7 / 9 &? &? \\\hline \end{array}$

50 days from July 9 is August 28.

Match the following terms with their definitions. -Chain discount

2/10, n/30 is an example of:

An invoice dated March 6 with terms of 1/10, EOM results in the end of the discount period on:

The single equivalent discount rate is found by taking the net price equivalent rate and adding it to 1.

The single equivalent discount rate of the trade discount 5/4/1 is:

A local college bookstore paid a net price of $12,500 for textbooks for the coming semester. The publisher offered a trade discount of 20%. The publisher's original list price was:

Find amount of (A)net price and (B)trade discount $\begin{array} { | l | l | l | l | l | } \hline \text { Item } & \text { List Price } & \text { Chain Discount } & \text { Net Price } ( \mathrm { A } ) & \text { Trade Discount } ( \mathrm { B } ) \\\hline \text { Dishwasher } & \$ 1400 & 13 / 10 / 4 & ? & ? \\\hline\end{array}$

Cash discounts are not taken on freight or returned goods.

The complement of 35% is:

Calculate (A)cash discount and (B)net amount paid: $\begin{array}{|c|c|c|c|c|c|c|}\hline \begin{array}{l}\text { Gross Invoice } \\\text { (including freight) }\end{array} & \text { Freight } & \begin{array}{l}\text { Date of } \\\text { Invoice }\end{array} & \text { Terms } & \begin{array}{l}\text { Date of } \\\text { Payment }\end{array} & \begin{array}{l}\text { Cash } \\\text { Discount }\end{array} & \begin{array}{l}\text { Net Amount } \\\text { Paid }\end{array} \\\hline \$1,800& \$ 50 & 8 / 11 & \begin{array}{l}2 / 10,1 / 15 \\n / 30\end{array} & 122 & \text { (A) } & \text { (B) } \\\hline\end{array}$

Buffy Rich wants to buy a new line of stereos for her shop. Manufacturer A offers trade discounts of 20/14, and Manufacturer B offers trade discounts of 25/7. Assuming both manufacturers have the same list price, which manufacturer should Buffy buy from?

A cash discount sometimes is taken on the amount of trade discount.

Calculate the End of Discount Period and End of Credit Period. $\begin{array} { | l | l | l | l | } \hline \text { Date of Invoice } & \text { Terms } & \begin{array} { l } \text { End of Discount } \\\text { Period }\end{array} & \begin{array} { l } \text { End of Credit } \\\text { Period }\end{array} \\\hline \text { Nov } 28 & 2 / 10 \text { EOM } & \text { ? } & \text { ? } \\\hline\end{array}$