Cash Discounts: Other Methods Mathematics of Buying Cash Discounts: Other Methods

Solve Cash Discount Problems with EOM dating. Objective Solve Cash Discount Problems with EOM dating.

End-of-Month Dating Cash discount method End-of-Month (EOM) proximo Objective 1 End-of-Month Dating Cash discount method End-of-Month (EOM) proximo 3/10 EOM 3/10 prox. 3% discount on invoice if payment is made by the 10th of the month that follows sale.

End-of-Month Dating 1 of 2 Invoice is dated January 14. Terms are 2/10 EOM Final Discount date = _______ Net Payment date = _______ Feb. 10 Mar. 2 Jan. 14 Jan. 31 Feb. 10 Feb. 28 Mar 2 10 20 18 2

Practice Ch 6, Section 4 Page 263 # 4 *Ch 6 Test Page 271 #5, 7

End-of-Month Dating 2 of 2 If invoice is dated the 26th or later an extra month is added. Then count-off the 15 days… Invoice is dated April 26. Terms are 3/15 EOM Final Discount date = _______ Net Payment date = ________ June 15 July 5 Apr 26 Apr 30 May 31 June 15 June 30 July 5 15 20 15 5

End-of-Month Dating: Summary Objective 1 End-of-Month Dating: Summary EOM Dating Final Discount Date is determined by counting from the end of the month of the invoice date. When the invoice is dated on the 26th or later, an extra month is added. The Net Payment Due Date is 20 days after the last discount date.

Proximo Invoice Amt: $356.20 Invoice Date: May 17 Terms: 3/15 prox. Date Invoice is paid: June 12 Amount of Discount = ________ Net due date = ________ Amount Due (if disc. earned) = ________ June 15 July 5 $356.20 x .97 =$345.51 May 17 May 31 June 15 June 30 July 5 15 20 15 5

Receipt of Goods Dating Objective Receipt of Goods Dating

Receipt-of-Goods Method Cash discount due dates are computed based upon when the goods are received. Used when shipping times are lengthy. 3/15 ROG June 20 June 30 July 5 Invoice Date: May 21 Terms: 3/15 ROG Delivery Date: June 20 Discount Due Date = ________ 15 10 5 July 5

ROG Determine the final discount date for this problem. Invoice Date: Jan. 15 Terms: 3/15 ROG Good Received on: Feb. 5 Final discount date = ________ Net payment due date = ________ Feb. 20 Mar. 12 Feb 20 Feb 5 Feb 28 Mar 12 15 20 8 12

ROG Invoice Amt: $682.28 Invoice Date: June 4 Terms: 3/20 ROG Delivery Date: July 25 Date Invoice is paid: August 10 Amount of Discount = __________________ Amount Due = _______________________ Extra: Net Payment Due Date = _____________ $682.28 x 2% = $13.65 $682.28 - $13.65 = $668.63 Sept. 3 July 25 July 31 Aug 14 Aug 31 Sept. 3 20 6 14 20 17 3

ROG Summary Receipt of goods method is used when shipping times are longer. Final discount date is set based upon when the merchandise is received, not the invoice date. Net payment due date is 20 days after the final discount date.

Practice Ch 6, Section 4 page 263 #6 Ch 6 Test page 271

Objective Extra Dating Method

Extra Dating Method Extends the discount period. Objective 3 Extra Dating Method Extends the discount period. Used as an incentive during a slow sales season. Used to gain a competitive sales advantage. 2/10-50 extra 2/10-50 ex. 2/10-50 x

Extra Dating 1 of 2 Invoice Date: Nov 22 Terms: 1/10-20 x Final Discount Date = ________ Net Payment Date = ________ Dec. 22 Jan. 11 Dec 2* Nov 22 Dec 22 Dec 31 Jan 11 Jan 31 Nov 30 10 8 2 20 20 9 11

Extra Dating 2 of 2 Invoice Date: April 12 Terms: 3/15-50 ex. Final Discount Date = ________ Net Payment Date = ________ June 16 July 6 Apr 27* June 16 July 6 Apr 12 Apr 30 May 31 June 30 15 50 3 31 16 20 14 6

Practice Ch 6, Section 4 page 263 #3, 5 Ch 6 Test page 271 #8

Practice Ch 6, Section 4 Determine discount and amount due Page 263 #9 – 13 Application Problems Pages 264 – 265 #18 – 20, 25, 26

Determine credit given for partial payment of an invoice. Objective 4 Determine credit given for partial payment of an invoice.

Objective 4 Partial Payments Customers sometimes only pay a portion of what is owed. If the partial payment is made within the discount period, they are entitled to a discount on the portion of the invoice that is paid.

Partial Payment Invoice amount: $200 Terms: 2/10 -$100 Invoice amount: $200 Terms: 2/10 Send in a partial payment of $100 within the cash discount period. What is the credit given? $100 balance 100% 2% 98% Credit Given – Cash Discount = Partial Payment Amount Invoice Amt. – Cash Discount = Payment Amt. ??? $100

Partial Payments 1 of 3 100% 3% 97% Objective 4 Partial Payments 1 of 3 Invoice: $100 Terms: 3/10 Partial Payment: $50 Credit Given = ? 100% 3% 97% Credit Given – Discount = Partial Payment Amount ??? $50

Partial Payments 2 of 3 100% 5% 95% Objective 4 Partial Payments 2 of 3 Invoice: $580 Terms: 5/15 Partial Payment: $200 Credit Given = ? 100% 5% 95% Credit Given – Discount = Partial Payment Amount ??? $200

Partial Payments 3 of 3 Problem #23, page 251 Objective 4 Partial Payments 3 of 3 Problem #23, page 251 Mail Boxes Etc. receives an invoice amounting to $672.30 with terms of 8/10, net 30 and dated AS OF September 1. If a partial payment of $450 is made on Sept. 8, find (a) the credit given for the partial payment (b) the balance due on the invoice.

Partial Payments 3 of 3 Problem #23, page 251 Objective 4 Partial Payments 3 of 3 Problem #23, page 251 Mail Boxes Etc. receives an invoice amounting to $672.30 with terms of 8/10, net 30 and dated AS OF September 1. If a partial payment of $450 is made on Sept. 8, find (a) the credit given for the partial payment and (b) the balance due on the invoice.

Partial Payments 3 of 3 Problem #23, page 251 Objective 4 Partial Payments 3 of 3 Problem #23, page 251 Mail Boxes Etc. receives an invoice amounting to $672.30 with terms of 8/10, net 30 and dated AS OF September 1. If a partial payment of $450 is made on Sept. 8, find (a) the credit given for the partial payment and (b) the balance due on the invoice. Balance Due = Invoice Amount – Credit Given $183.17 $672.30 $489.13

Practice MathXL: Chapter 6 Section 4 Homework