This document contains information about calculating trade discounts, including: - Single trade discounts are calculated using formulas to find the trade discount amount and net price given the list price and trade discount rate. - Chain discounts use the net price equivalent rate and single equivalent discount rate to calculate the net price and trade discount amount from the list price when multiple discount rates are given. - Examples are provided to demonstrate calculating single and chain trade discounts along with finding the list price when the net price and trade discount rate are known.

2. GROUP 3 — BACC29 - A

3. 1- Abdi Qafar Ahmed Jama
2- Abdirahman Ali
3- Hafsa Abdiaziz Mohamed
4- Aisha Mohamed Ahmed
5- Aisha Abdulkadir
6- Feisal Mohamed
7- Yasir Mohamed
Group Names

4. Chapter 7- Discounts: Trade and Cash

5. 1- Trade Discounts- Single and Chain [ includes
Discussion of Freight] .
- Calculating single trade discounts with formulas and
Complements.
- Finding list price when net price and trade discount rate are
Known.
- Calculating chain discounts with the net price equivalent rate
and single equivalent discount rate.
Learning Objectives

6. Calculating single trade with
formulas and complements
Formulas for: Trade Discount Amount and Net
Price.
Trade Discount Amount = List Price X Trade Discount Rate
or TDA = LP X TDR
Net price = List price – Trade discount amount
or NP = LP -- TDA

7. Single Trade Discount
Examples
1- The list price of a dining room set with a 30% trade discount
is $16,000. What are the trade discount amount and net price?
(Use the complement method for net price.)
2- The list price of a smartphone is $299. A local Verizon dealer
receives a trade discount of 20%. Find the trade discount
amount and the net price?

8. Solution
1- Given
L- $16,000 CTDR= 100-30% = 70% TDA= L X CTDR
TDR- 30%¬ 0.3 70% ¬ 0.7 = $16,000 X 0.7
TDA¬? = $11,200
NP¬? Np = L – TDA
= $16,000 – 11,200
= $ 4,800
2- Given
L- $299 TDA= L X TDR
TDR- 20%¬ 0.2 = $299 X 0.2
TDA ¬? = $59.8
NP¬?

9. Formula :
List Price = Net price .
Complement of trade discount rate
Example
1- The net price of a video system with a 20%trade discount is
$400.What is the list price?
Finding list price when net price and
trade discount rate are Known.

10. 2- A local Barnes and Noble paid a $79.99 net price for each
calculus textbook. The publisher offered a 40% trade
discount.
What was the publisher's list price?
Cont…

11. 1- Given
NP- $4,000 CTDR= 100 ¬ 20% LP= NP `
TDR- 20%¬ 0.2 = 80% ¬ 0.8 CTDR
LP ¬? = $400 `
0.8
= $500
2- Given
NP- $79.99 CTDR= 100¬ 40% LP= NP `
TDR- 40%¬ 0.4 = 60%¬ 0.6 CTDR
LP¬¬? = $79.99 `
0.6
= $133.31
Solution

12. Example
1- Lamps Outlet bought a shipment of lamps from a wholesaler. The
total list price was $14,000 with a 4/8/20 chain discount. Calculate
the net price and trade discount amount.
(Use the net price equivalent rate and single equivalent discount rate
in your calculation.)
Calculate chain discounts with the net price
equivalent rate and single equivalent discount rate

13. Solution
2- Given
L- $14,000 CTDR= 100¬ 4= 96%= 0.96 NP= L X CTDR = $14,000 X 0.70656
NP¬? = 100¬ 8= 92%= 0.92 = $9891.84
TDA¬? = 100¬ 20= 80%= 0.8 TDA= L ¬ NP = $14,000 ¬ 9891.84
= 0.96 X 0.92 X 0.8 = $4,108.16
= 0.70656

14. 1- Lamps Outlet bought a shipment of lamps from a wholesaler. The
total list price was $20,000 with a 8/20/25 chain discount. Calculate
the net price and trade discount amount.
(Use the net price equivalent rate and single equivalent discount rate
in your calculation.)
TEST

15. 1- Given
Lp- $20,000 CTDR= 100¬ 8= 92%= 0.92 NP= LP X CTDR = $20,000 X 0.552
Np¬? =100¬20= 80%= 0.8 = $11,040
TDA¬? = 100¬ 25= 75%= 0.75 TDA= LP ¬ NP = $20,000 ¬ 11,040
= 0.92 X 0.8 X 0.75= 0.552 = $8,960
Solution