1. Section 3 - Cash Discounts: Ordinary Dating Methods
Mathematics of Buying
Section 3 - Cash Discounts: Ordinary Dating Methods

2. Introduce Cash Discounts.
Objective
Introduce Cash Discounts.

3. Cash Discounts
Cash discounts are offered as a means of encouraging quick payment.

4. Cash Discounts Terms: 2/10 n/30 Home Accessories Wholesalers Sold To:
Home Accessories Wholesalers
Sold To:
Kitchens Galore
Date:
10-Jun
10100 Fair Oaks Blvd
Order No.
796152
Fair Oaks, CA 95628
Shipped by:
UPS
Terms:
2/10 n/30
Quantity
Order No. Description
Unit Price
Extension Total
6 doz.
pastry brush
$37.80 doz
$226.80
3 gro.
napkins, cotton
$12.60 gro
$37.80
9 doz.
cherry pitters
$14.04 doz 8
food processors (3 qt.)
$ ea
53 pr.
stainless tongs
$68.12 pr
Invoice Total
Shipping/Insurance
$37.45
Total Amt Due

5. Cash Discounts: Ordinary Dating Method
Objective
Cash Discounts: Ordinary Dating Method

6. Ordinary Dating Method
Most cash discounts are expressed using the Ordinary Dating Method. 2%
net 10 30
2/10, n/30
Read as: “two ten net thirty”
2/10, net 30
2: 2% discount
10: must pay within 10 days, to earn the discount
n: net amount (original invoice total)
30: must pay within 30 days the net amount

7. Example 1 Determine the cash discount. Invoice Amount: $285
Terms: 3/15, n/30
Payment will be made within 15 days.
Discount = $285 x 3%
Discount = $285 x .03
Discount = $8.55

8. Example 2 Determine the cash discount.
Invoice Amount: $485 (includes $15 in shipping)
Terms: 2/10, n/30
Payment will be made within 10 days.
Remove shipping:
$485 - $15 = $470
Discount = $470 x 2%
Discount = $470 x .02
Discount = $9.40

9. Determine final discount date, net payment date.
Objective
Determine final discount date, net payment date.

10. Number of Days
Handout or use page 349 in your textbook.

11. Determine Final Discount Date and Net Payment Date
Invoice Date: March 7
Terms: 2/15, n/30
Final Discount Date (last day to earn the discount) __________
Net Payment Due Date __________
April 6
March days =
March 22
March days =
= 96 (April 6)

12. Discount Earned ? Invoice Date: October 17 Terms: 1.5/20, n/30
If payment is made on November 7, is the 1.5% cash discount still “available”?
October days =
= 310
November 6
Payment occurs after the cutoff point of November 6, therefore no cash discount is earned.

13. Days in Each Month 31 days Jan. Mar. May July Aug. Oct. Dec.
Feb.* Apr June
Sept Nov.
30 days
* 28 in Feb.

14. Compute Due Dates 1 of 2 Invoice Date Terms Final Discount Date
Net Payment Date
May 4
2/10, n/30
April 12
3/10, net/30
May days
May 14
May 4
May 31
June 3
30 days
27 days
3 days

15. Compute Due Dates 1 of 2 Invoice Date Terms Final Discount Date
Net Payment Date
May 4
2/10, n/30
May 14
June 3
April 12
3/10, net/30
April 22
April 12
April 30
May 12
30 days
18 days
12 days

16. Compute Due Dates 2 of 2 Invoice Date Terms Final Discount Date
Net Payment Date
June 30
3/15, n/60
July 31
2/15, net/20
July 15
June 30
July 31
Aug 29
60 days
31 days
29 days

17. Compute Due Dates 2 of 2 Invoice Date Terms Final Discount Date
Net Payment Date
June 30
3/15, n/60
July 31
2/15, net/20
July 15
Aug 29
Aug 15
July 31
Aug 20
Aug 31
20 days

18. Practice
Ch 7, Section 3
Page 283
#5, 6, 9, 10, 12

19. Use postdating when calculating cash discounts.
Objective
Use postdating when calculating cash discounts.

20. Postdating Invoices are sometimes postdated. Date 7/25 AS OF 08/01
Gives the purchaser more time to take advantage of the discount.
Date 7/25 AS OF 08/01

21. Postdating Invoice Date AS OF Terms Final Discount Date
Net Payment Date
June 30
July 10
3/15, n/60
July days
July 25
July 10
July 31
Aug 31
Sept 8
60 days
21 days
31 days
8 days

22. Postdating Invoice Date AS OF Terms Final Discount Date
Net Payment Date
June 30
July 10
3/15, n/60
July days
July 25
July days =
= 251
September 8

23. Practice
Ch 7, Section 3
Page 283
#3, 4

24. Sliding Scale Cash Discounts
Objective
Sliding Scale Cash Discounts

25. Cash Discounts: Sliding Scales3% 2% 1%
net 10
Day 0 20 30 60

26. Practice Problem Invoice Amount (w/out shipping): $1080
Invoice Date: July 8
Terms: 5/10, 2/20, n/30
Date that Invoice is Paid: July 26
Shipping and Insurance: $62.15
July July 26
26 – 8 = 18 days
Amount of Discount = ____________________
$21.60
$1080 x 2%
Total Amount Due = _____________
$1,080 - $
$1,120.55

27. Practice
Ch 7, Section 3
Page 283
#11

28. Textbook Problems
Practice

29. Practice #18, page 284 List Price of George Foreman Grill: $59.99
Trade Discount: 20/5/10
Terms: 4/10, n/30
What is the net cost to the purchaser assuming trade discount and cash discount are used?
Apply Trade Discount: $59.99 x .80 x .95 x .90 =
$41.03
Apply Cash Discount:
x .96 =
$39.39

30. Practice #19, page 256
An invoice is dated January 18 and offers terms of /10, 4/20, 1/30, n/50.
Find a) the three final discount dates and b) the net payment date.
6%: January 28
4%: February 7
1%: February 17
Jan. 18
Jan. 31
Feb. 28
Net: March 9 10 13 7 13 17 13 28 9

31. Practice
Ch 7, Section 3
Page 284
#16 – 19

32. Part II - Practice Test Ch 7 Practice Test (handout)
Scoring Criteria for Practice Test:
All required problems completed.
Process (solution method shown) for all problems except multiple choice or fill-in-the-blank ones.
Score
_____ / 10