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Important business documents that help sellers keep track of sales transactions and buyers keep track of
purchase transactions.

Invoices

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_____________ is a percent off the list price that retailers can deduct.
List Price x Trade Discount Rate

Trade Discount Rate

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Trade discounts may be __________ discounts or a __________ of discounts.

ingle, Chain
 

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Which month has 30 days?

June
 

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(T/F) A chain discount is a series of three or more successive discounts.

False
 

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Net price plus amount of trade discount equals list price.

True
 

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(T/F) A single equivalent discount rate of 0.45975 means the buyer saves
approximately 46 cents per $1 of list price.

True
 

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(T/F) The complement of 25% is 52%.

False
 

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_________purchase goods from manufacturers and wholesalers and then sell
these goods to the end-customer.

Retailers
 

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A reduction off the original selling price (list price) of an item and is not related to early payment.

Trade Discount
 
The result of an early payment based on the terms of sale.

Cash Discount
 
Suggested retail price paid by customers.

List Price
 
The amount of discount that retailers receive off the list price.

Trade Discount Amount

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Document recording purchase and sales transactions.

Invoice
 
A percent off the list price that retailers can deduct.

Trade Discount Rate
 
Price that the retailer pays the manufacturer or wholesaler.

Net Price
 
Determine how freight will be paid. Most common freight terms are FOB shipping point and FOB destination.

Freight Terms
 
Last day from date of invoice when customer can take cash discount.

End of Credit Period
 
Amount of time to take advantage of a cash discount.

Discount Period
 
Maturity date, or when the note will be repaid.

Due Dates
 
Cash discount period begins at the end of the month invoice is dated. After the 25th discount period, one additional month results.

End of Month (EOM)
 
List Price x Trade Discount Rate

Trade Discount Amount Formula
 
List Price - Trade Discount Amount

Net Price Formula
 
Net Price / Complement of Trade Discount Rate

List Price Formula
 
Buyer pays cost of freight in getting goods to his location.

FOB Shipping Point
 
Seller pays cost of freight in getting goods to buyer's location.

FOB Destination
 
Company gives only one trade discount.

Single Trade Discount
 
Difference between the discount rate and 100%.

Complement
 
A model NASCAR race car lists for $79.04 with a trade discount of 30%.
What is the net price of the car?

$55.328

$79.04 x 0.7 =
 
A model NASCAR race car lists for $79.99 with a trade discount of 40%.
What is the net price of the car?

$47.99

$79.99 x 0.6 =
 
A local Barnes and Noble paid a $80.50 net price for each hardbound atlas.
The publisher offered a 10% trade discount. What was the publisher's list price?

$89.44

List Price = Net Price / (1-0.10)
$80.50 / 0.90 =
 
If the net price of a stove is $900 and the trade discount rate is 40%, the list price is:

$1500
 
J.C. Penney of Boston sold office equipment for $12,000 to Lee's of San Diego.
Terms of the sale are 3/10, n/30 FOB Boston. J.C. Penney has agreed to prepay freight $300.
Assuming Lee's pays within the discount period, how much will Lee's pay J.C. Penney?

$11,940

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