# Using your understanding of discounts 2/10, N/30

## Presentation on theme: "Using your understanding of discounts 2/10, N/30"— Presentation transcript:

Using your understanding of discounts 2/10, N/30
Dating Terms Using your understanding of discounts 2/10, N/30 What are your thoughts of dating terms? Any Ideas? Ask students of they have seen terms 2/10, n/30 before?

Dating Terminology Invoice: lists the quantities and costs of the items purchased. Discount Incentive: To encourage prompt payment, the supplier may offer a cash discount if the bill is paid within a certain number of days. Many suppliers use ordinary dating. The exact terms of the discount are stated on the invoice When the discount period and the credit period start on the date of the invoice You receive an invoice for each purchase you make from a supplier. The invoice lists the quantities and costs of the items purchased. To encourage prompt payment, the supplier may offer a cash discount if the bill is paid within a certain number of days. The exact terms of the discount are stated on the invoice. Many suppliers use ordinary dating.

2/10, net 30 2/10, n/30 What does this all mean?
2% cash discount if paid within 10 days of date of invoice. Net price must be paid within 30 days of date of invoice What does this all mean? Allow students the ability to make an educated guess of what the headline may mean? Click once to display the first statement. 2% cash discount if paid within 10 days of date of invoice is the first part of the ordinary dating. Click a second time and the next statement will be displayed. Net price must be paid within 30 days of date of invoice is the last part of the ordinary dating terms.

Review of Formulas from Discounts
Cash Discounts = Net Price * (100%-Discount Rate) 100% - discount rate = paid rate

Example Terms are 3/10, n/30. Net price is \$640.
What is the discount rate in this problem? 3% What is the paid percent of 3%? 100-3 = 97% What is the cash price? 640 * .97 =

2/10, n/30 ROG ROG: Receipt of Goods
2/10, n/30 ROG means that the discount period starts with the receipt of the goods

Example The net price of goods from Fashion Footwear, to the Mall Shoe Store is \$ If the invoice is paid on December 11, what is the cash price? On an invoice you may find the following information. Invoice Date: 12/05/09 Received Date: 12/05/09 Terms 8/10, n/30

Answer to Example What is the discount rate?
8% When is the last day to take advantage of the discount? December 15 Do they make the discount period? Yes What is the cash price? * .92 =

EOM Dating Terms EOM: End of Month
Discount period begins AFTER the end of the month 6/15 EOM A 6% cash discount if an invoice is paid within 15 days AFTER the end of the month in which the invoice is issued. Many wholesalers use end of month dating when granting cash discounts. With this method of dating, your business receives a cash discount if you pay for your merchandise within a certain number of days after the end of the month. For example: 6/15 EOM A 6% cash discount if bill is paid within 15 days after the end of the month in which the invoice is issued.

Example Bob’s Drugstore received an invoice from General Wholesalers. What is the last day that Bob’s can take advantage of the 4% discount? What is the cash price? Date: July 12 Terms: 4/10 EOM Total on Invoice: \$727.05 Invoice was paid on August 5th

Answer to Example We stated the discount rate to be 4%.
When is the last day to take advantage of the discount? August 10th Do they make the discount period? Yes What is the cash price? * .96 =

Putting it all together
Date: October 10, 2009 McKee Foods Corporation Invoice Number: Corner Junction Terms: 4/10, n/30 Sold By: Independent Distributor Becca Qty Description Net Cost 24 12 36 Chewy Choc Chip Chewy Oats & Honey Star Crunch Oatmeal Pies Cherry Pie Choc Chop Cookie Cosmic Brownie 4.44 2.22 6.66 8.04 3.90 Total Store Cost \$ Allow students the opportunity to complete the problem. What is the discount percent? When is the last day they are able to take advantage of the discount? What is the net price, when paid on October 15, 2009?

Answer to the Example What is the discount percent? 4% When is the last day they are able to take advantage of the discount? October 20, 2009 What is the net price, when paid on October 15, 2009? 34.14 * .96 = \$32.77 The first 3 clicks will display the questions. The last 3 clicks will display the answers to each question. What is the discount percent? 4% When is the last day they are able to take advantage of the discount? October 20, 2009 What is the net price, when paid on October 15, 2009? 34.14 * .96 = \$32.77 \$32.77 is what the business will write the check for to pay their invoice.

Putting it all together
Date: August 10, 2009 Augusta Sportswear Invoice Number: Corner Junction Terms: 5/10, EOM Sold By: Qty Description Net Cost 5 1 2 7 Micro poly pant lined Micro poly full zip jacket 77.50 16.70 31.00 118.65 Total Store Cost \$ Allow students the opportunity to complete the problem. What is the discount percent? When is the last day they are able to take advantage of the discount? What is the net price, when paid on September 9, 2009?

Answer to the Example What is the discount percent? 5% When is the last day they are able to take advantage of the discount? September 10, 2009 What is the net price, when paid on September 9, 2009? * .95 = \$231.66 The first 3 clicks will display the questions. The last 3 clicks will display the answers to each question. What is the discount percent? 5% When is the last day they are able to take advantage of the discount? September 10, 2009 What is the net price, when paid on September 9, 2009? * .95 = \$231.66 \$ is what the business will write the check for to pay their invoice.

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