This presentation is about Cash and Trade Discounts. The formulas, examples, and definitions. Hope you like it. This is the thing that I used when I had my teaching demo in Bookkeeping.
6. -the amount of discount that the
wholesaler or retailer receives off
the list price or the difference
between the list price and the net
price.
ALWAYS!
7. Hello Pres. Obama!
May I buy a box of
canned pineapple
juice to you?
Yes sure! Since you will
buy the whole box, I
will give you a
discount of 30%
8. • Suggested Retail Price/Catalog Price/List
Price- three common terms for the price
which the manufacturer suggests an item be
sold to the consumer.
•Net price- the price the manufacturer or
retailer pays or the list price minus the trade
discount.
•Discount rate- a percent of the list price.
9. TRADE DISCOUNT FORMULA
Trade Discount (TD) =List Price (LP) x Trade Discount Rate (R)
or
TD= LP x R
Net Price (NP) = List Price (LP) - Trade Discount (TD)
or
NP= LP - TD
10. LET’S HAVE AN EXAMPLE
Dominador will buy a box of canned tuna that lists for P680
and has a trade discount of 25%. How much is the Net
Price?
Solution: TD = LP x R
Trade Discount = P680 x .25%
= P170
NP = LP – TD
Net Price = P680 – P170
= P510
Thank
you!
11. TRY TO HELP THEM!
Ex. 2
Pablito will buy a set of Barbie
Dolls that lists for P950 and has a
trade discount of 30%. How
much is the Net Price?
Ex. 3
Clementina will buy a
coffee maker that lists
for P1,500 and has a
trade discount of 50%.
How much will
Clementina pay?
12. Ex.2
Solution:
Trade Discount = P950 x .30%
= P285
Net Price = P950 – P285
= P665
Thank
you!
Ex.3
Solution:
Trade Discount = P1500 x .50%
= P750
Net Price = P1500 – P750
= P750
A million
thanks!
17. Anne Curtis will buy a set of shoes that lists for P2, 000
and has a trade discount series of 30/20/15. Find the
net price.
1. Step by Step Method
P 2, 000
X .30
P 600
P 2, 000
- 600
P 1, 400
P 1, 400
X .20
P 280
P 1, 400
- 280
P 1,120
P 1,120
X .20
P 168
P 1,120
- 168
P 952
TD= LP x R
NP = LP – TD
Net Price= P952
Gracias!
18. - the difference between 100% and the
given percent.
Examples:
The complement of 30% is 70%.
The complement of 55% is 45%
The complement of 5% is 95%
19. 2. Complement Method
Anne Curtis will buy a set of shoes that lists for P2, 000
and has a trade discount series of 30/20/15. Find the
net price.
Step 1: Subtract each trade discount from
100% and convert to decimals.
100 100 100
- 30 - 20 - 15
70- .7% 80- .8% 85- .85%
Step 2: Multiply all the complements together
to get the net price factor.
Net Price Factor = .7 x .8 x .85
= 0.476
20. Anne Curtis will buy a set of shoes that lists for P2, 000
and has a trade discount series of 30/20/15. Find the
net price.
Step 1: Subtract each trade discount from
100% and convert to decimals.
100 100 100
- 30 - 20 - 15
70- .7% 80- .8% 85- .85%
Step 2: Multiply all the complements together
to get the net price factor.
Net Price Factor = .7 x .8 x .85
= 0.476
That’s more
faster and
easier way!
Thanks!
Step 3: Net Price = List Price x Net Price
Factor
Net Price = P2, 000 x 0.476
Net Price= P952
22. SINGLE EQUIVALENT DISCOUNT
Formula:
Single Equivalent Discount = 1 – Net Price Factor
= 1 – 0.476
= 0.524% or 53%
Anne Curtis will buy a set of shoes that lists for P2, 000
and has a trade discount series of 30/20/15. Find the
net price.
23. TRY TO HELP THEM!
Ex. 2
Aling Vilma will buy a set of
perfume that lists for P5, 000 and
has a trade discount series
20/15/5. Find the net price.
Ex. 3
Antonino will buy a DSLR
Camera that lists for
P20, 000 and has a trade
discount series 30/20/10.
Find the net price and the
Single Equivalent Discount.
24. Thank
you!
I’ll give
you my
power for
helping
me!
P 5, 000
X .20
P 1000
P 5, 000
- 1, 000
P 4, 000
P 4, 000
X .15
P 600
P 4, 000
- 600
P 3, 400
P 3, 400
X .05
P 170
P 3, 400
- 170
P 3, 230
Net Price= P3, 230
100 100 100
- 30 - 20 - 10
70- .7% 80- .8% 90 .9%
Net Price Factor = .7 x .8 x .9
= 0.504
Net Price = P20, 000 x 0.504
Net Price= P10, 080
SED= 1 – NPF
= 1 – 0.504
=0.496% or 49.6%
Ex. 3
Ex. 2
25. CASH DISCOUNT
- An incentive that a seller
offers to a buyer in return
for paying a bill owed
before the scheduled due
date.
26.
27.
28. -Credit terms 2/10, n/30. This
means you will get a 2% discount
if you pay within 10 days of
receiving the invoice. You must
pay the bill within 30 days or you
start to incur interest charges.
29. LET’S HAVE AN EXAMPLE!
Vic Sotto received an invoice of P3, 000 dated
January 1, 2015, terms 2/10, n/30. He paid it in full
on January 9, 2015. How much did he pay?
Date of Invoice: January 1, 2015
Day 1 of the discount period:January 2, 2015
Last day of the discount period: January 10, 2015
Date of Payment: January 9, 2015 (Vic Sotto got a discount)
Cash Discount = Price x Discount Rate
= P3, 000 x .02%
= P60
Net Amount = Price – Cash Discount
= P3, 000 – P60
= P2, 940
30. Credit terms is 2/10, n/30 E.O.M.
This means you get a 2% discount if
you pay within the first 10 days of
the next month. You must pay the
bill within the first 30 days of the
next month or you start to incur
interest charges.
31. LET’S HAVE AN EXAMPLE!
Bangga, Inc. received an invoice for P50, 000 dated
June 5, 2014, terms 2/10 E.O.M. The invoice is paid
on July 10, 2014. How much is the amount paid?
Date of Invoice: June 5, 2014
Day 1 of the discount period:July 1, 2014
Last day of the discount period: July 10, 2014
Date of Payment: July 10, 2014
Cash Discount = Price x Discount Rate
= P3, 000 x .02%
= P60
Net Amount = Price – Cash Discount
= P3, 000 – P60
= P2, 940
(Bangga, Inc. got a discount)
32. Credit Terms is 2/10 R.O.G.
This means you get a 2%
discount if you pay within the
first 10 days after the goods
are received.
33. LET’S HAVE AN EXAMPLE!
Nora Aunor received an invoice of P5, 550 dated January 10,
2015, terms 2/10, n/30 R.O.G., for a shipment that arrived on
February 5, 2015. Nora Aunor paid it in full on February 10,
2015. How much did Nora Aunor pay?
Date of Invoice: January 1, 2015
Day 1 of the discount period:January 2, 2015
Last day of the discount period: January 10, 2015
Date of Payment: January 9, 2015 (Vic Sotto got a discount)
Cash Discount = Price x Discount Rate
= P3, 000 x .02%
= P60
Net Amount = Price – Cash Discount
= P3, 000 – P60
= P2, 940
34. Many of you will utilize this information at
some point in your life. You may be working in
purchasing, or accounting, or sales. You may
be negotiating for a car. You may own a small
business. These terms, and the math
underlying them, are important in
business. So, learn this material, utilize your
percentage multiplication skills, and your
percentage to decimal conversion skills, and
go do business!
35. Reference: Santos, Francis. Principles of
Accounting. Malabon City: Mutya Publishing
House INC., 2007. 78-85.