encourage customers to make purchases. They serve as valuable tools in the world of commerce, benefiting both consumers and sellers

1. DISCOUNT AND
DISCOUNT SERIES
By:
Engr. Vergielyn Matus, LPT

2. Learning objectives:
● Explain the term trade discount, cash discount, retail
discount and discount series
● Determine the discount, discount rate, and equivalent rate
of a discount series
● Solve real-life problems involving discount and discount
series

3. What is Discount?
•A reduction in price of a good or
commodity

4. DIFFERENT TYPES OF DISCOUNTS
•incentive offered by the
seller in return for paying
the bill owed before the
scheduled payment
deadline
•7. 5/20, n/30
•reduction from list price
•typically offered between
manufacturer and
wholesaler or the
wholesaler and retailer
•similar to trade discount
•amount offered by
merchants to customers or
between wholesaler and
retailer
CASH DISCOUNT TRADE DISCOUNT RETAIL DISCOUNT

5. CASH
DISCOUNT
• 7 means means that the buyer is
entitled to receive a 7%
deduction for immediate
payment;
• 5/20 means that if the bill is paid
within 20 days, 5% will be
deducted·
• n/30 means that the amount due
is to be paid in full, not later than
30~ day
Cash Discount= Invoice x Cash Discount
Rate
Net Amount=Invoice- Cash discount
Cash Discount Rate=
Cash Discount
Invoice

6. EXAMPLE:
The full amount of the purchase is P540, If a cash
discount of 10% is allowed, find the amount of cash
discount and the net amount to be paid.

7. The full amount
of the purchase
is P540, If a cash
discount of 10%
is allowed, find
the amount of
cash discount
and the net
amount to be
paid.
𝐶𝑎𝑠ℎ 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 = 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒 𝑃𝑟𝑖𝑐𝑒 × 𝐶𝑎𝑠ℎ 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑟𝑎𝑡𝑒
𝐶𝑎𝑠ℎ 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 = 540 × 0.10 = 𝑷𝒉𝒑 𝟓𝟒
𝑁𝑒𝑡 𝑎𝑚𝑜𝑢𝑛𝑡 = 𝐼𝑛𝑣𝑜𝑖𝑐𝑒 − 𝐶𝑎𝑠ℎ 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡
𝑁𝑒𝑡 𝑎𝑚𝑜𝑢𝑛𝑡 = 𝑃540 − 𝑃54 = 𝑷𝒉𝒑 𝟒𝟖𝟔
𝑇ℎ𝑒𝑟𝑒𝑓𝑜𝑟𝑒, 𝑡ℎ𝑒 𝑐𝑎𝑠ℎ 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑖𝑠 𝑃54
𝑎𝑛𝑑 𝑡ℎ𝑒 𝑎𝑚𝑜𝑢𝑛𝑡 𝑡𝑜 𝑏𝑒 𝑝𝑎𝑖𝑑 𝑖𝑠 𝑃ℎ𝑝 486.

8. RETAIL
DISCOUNT
• amount offered by merchants to
customers or between wholesaler
and retailer
• similar to trade discount
Retail Discount= List price x Discount
Rate
Net Price=List price- Retail Discount
Discount Rate=
Retail Discount
List price

9. EXAMPLE:
Jenny bought a computer set at a computer shop. The
list price of the computer is P50,000 with 12% retail
discount. How much did she actually pay?

10. Jenny bought a
computer set at
a computer
shop. The list
price of the
computer is
P50,000 with
12% retail
discount. How
much did she
actually pay?
R𝑒𝑡𝑎𝑖𝑙 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 = 𝐿𝑖𝑠𝑡 𝑃𝑟𝑖𝑐𝑒 × 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑟𝑎𝑡𝑒
𝐶𝑎𝑠ℎ 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 = 50000 × 0.12 = 𝑷𝒉𝒑 𝟔𝟎𝟎𝟎
𝑁𝑒𝑡 𝑝𝑟𝑖𝑐𝑒 = 𝐿𝑖𝑠𝑡 𝑝𝑟𝑖𝑐𝑒 − 𝑅𝑒𝑡𝑎𝑖𝑙 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡
𝑁𝑒𝑡 𝑎𝑚𝑜𝑢𝑛𝑡 = 𝑃50000 − 𝑃6000 = 𝑷𝒉𝒑 𝟒𝟒𝟎𝟎𝟎
𝑇ℎ𝑢𝑠, 𝑠𝑜𝑓𝑖𝑎 𝑝𝑎𝑖𝑑 𝑃44000 𝑓𝑜𝑟 𝑡ℎ𝑒 𝑐𝑜𝑚𝑝𝑢𝑡𝑒𝑟 𝑠𝑒𝑡.

11. TRADE
DISCOUNT
• •reduction from list price
• •typically offered between
manufacturer and wholesaler
or the wholesaler and retailer
Trade Discount= List price x Trade
Discount Rate
Net Price=List price- Trade discount
Trade Discount Rate=
Trade Discount
List price

12. EXAMPLE:
A retailer paid P991.20 less for a bill of goods
amounting to P3450 after he was allowed a trade
discount by a wholesaler. What was the rate of the
trade discount?

13. A retailer paid
P991.20 less for a
bill of goods
amounting to
P3450 after he was
allowed a trade
discount by a
wholesaler. What
was the rate of the
trade discount?
𝑇ℎ𝑢𝑠. 𝑡ℎ𝑒 𝑡𝑟𝑎𝑑𝑒 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑟𝑎𝑡𝑒 𝑖𝑠 28%.
𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑅𝑎𝑡𝑒 = (𝑅𝑒𝑡𝑎𝑖𝑙 𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡)/(𝐿𝑖𝑠𝑡 𝑝𝑟𝑖𝑐𝑒)
𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑅𝑎𝑡𝑒 = (991.20)/(3450)
𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑅𝑎𝑡𝑒 = 0.28 𝑜𝑟 28%

14. DISCOUNT SERIES
A series of discounts applied to a good or commodity.

15. • Discount series can be converted to a single
equivalent discount rate (SEDR), which will give the
same discount as the discount series taken separately.
SEDR = 1 − [(1 − DR1) (1 − DR2) (1 − DR3)…]

16. EXAMPLE:
Calculate the single equivalent discount and amount of
trade discount on merchandise listing for P20,000, less
trade discounts 30%, 10% and 5%.

17. Calculate the
single
equivalent
discount and
amount of trade
discount on
merchandise
listing for
P20,000, less
trade discounts
30%, 10% and
5%.
SEDR = 1 − [(1 − 0.3) (1 − 0.10) (1 − 0.05)]
SEDR = 1 − 0.70 0.90 0.95
SEDR = 1 − 0.5985
𝐒𝐄𝐃𝐑 = 𝟎. 𝟒𝟎𝟏𝟓 𝐨𝐫 𝟒𝟎. 𝟏𝟓 %

18. ACTIVITY 9
• Cristina saved P124 after taking advantage of 4% cash discounts on an
invoice. What was the amount of the invoice?
• An invoice amounting to P6430 was paid within the discount period by
a cash payment of P6108.50. What rate of discount was allowed?
• Soledad receives a bill for P18000 July 7 with terms 8, 6/15, 4/30,
n/60. What cash discount will she receive if she pays c. on the 25th
day, d. on the 40th day.
• A TV is listed at P33000, less discounts of 5%, 7% and 9%. Find the net
price.

19. ACTIVITIES
1. A TV is listed at P33000, less discounts of 5%, 7% and 9%. Find the net price.
2. Find the single rate equivalent to the discount series of 14% and 16%.