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Mathematics of Buying

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Mathematics of Buying

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    1. Mathematics of Buying Cash Discounts: Ordinary Dating Methods

    2. Objective 1 Calculate net cost after discounts.

    3. Cash Discounts Cash discounts are offered as a means of encouraging quick payment.

    4. Cash Discounts

    5. Objective 2 Use the Ordinary Dating Method

    6. Ordinary Dating Method Most cash discounts are done using the Ordinary Dating Method.

    7. Example 1 Determine the cash discount. Invoice Amount: $285 Terms: 3/15, n/30 Payment will be made within 15 days.

    8. Example 2 Determine the cash discount. Invoice Amount: $485 (includes $15 in shipping) Terms: 2/10, n/30 Payment will be made within 10 days.

    9. Due Dates

    10. Objective 3 Determine whether cash discounts are earned.

    11. Compute Due Dates 1 of 2

    13. Objective 4 Use postdating when calculating cash discounts.

    14. Postdating Invoices are sometimes postdated. Gives the purchaser more time to take advantage of the discount. Date 7/25 AS OF 08/01

    15. Postdating

    16. Objective 5* Sliding Scale Cash Discounts

    17. Cash Discounts: Sliding Scales 3/10, 2/20, 1/30, n/60

    18. Practice Problems 1 of 3 Invoice Amount: $78.07 Invoice Date: May 5 Terms: net 30 Date that Invoice is Paid: June 1 Shipping and Insurance: $3.18

    21. Textbook Problems Practice

    22. Practice #18, page 244 List Price of Grill plus Oven: $140 Trade Discount: 20/5/10 Terms: 4/10, n/30 What is the net cost to the purchaser assuming trade discount and cash discount are used?

    23. Practice #19, page 244 An invoice is dated January 18 and offers terms of 6/10, 4/20, 1/30, n/50. Find a) the three final discount dates and b) the net payment date.

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