Question 1

An invoice for $7,000 dated September 1 with terms 2/10, 1½/20, n/30 is received in the mail on September 3. If the company wants to reduce the outstanding balance to $4,000, how much should they pay on September 12?
A) $3,000
B) $2,940
C) $2,955
D) $3,920
E) $3,940

Accepted Answer

The answer of An invoice for $7,000 dated September 1...

Question 2

What single rate of discount would be equivalent to a series of 15% / 8% / 4%?
A) 48.0%
B) 27.0%
C) 24.9%
D) 9.99%
E) 21.4%

Accepted Answer

We can use the formula: 
Equivalent rate = 100 × (1 - (1 - r1/100) × (1 - r2/100) × (1 - r3/100))
Where r1, r2, and r3 are the given rates.
Plugging in the values, we get: 
Equivalent rate = 100 × (1 - (1 - 15/100) × (1 - 8/100) × (1 - 4/100))
Equivalent rate = 100 × (1 - 0.85 × 0.92 × 0.96)
Equivalent rate = 100 × 0.248
Equivalent rate = 24.8%
Therefore, the single rate of discount equivalent to the given series is 24.9%, which is closest to option C.

Question 3

The list price of a garden tractor is $2,899. The trade discount series is 20%/12%. Calculate the net price of the tractor.
A) $2,041
B) $1,971
C) $1,885
D) $1,842
E) $1,627

Accepted Answer

The answer of The list price of a garden tractor...

Question 4

An invoice for $25,000 dated March 15 with terms 3/10, 2/20, n/30 is received in the mail on March 17. A payment of $15,000 is made on March 26. What is the outstanding balance?
A) $9,550.00
B) $9,700.00
C) $10,000.00
D) $10,300.00
E) $9,693.88

Accepted Answer

The invoice is due in 30 days from its date, which means it is due on April 14. The terms 3/10, 2/20 mean that if the invoice is paid within 10 days, a 3% discount is applied, and if it is paid within 20 days, a 2% discount is applied. Therefore, the discounted amounts for paying within 10 days and 20 days are:

$25,000 x 0.97 = $24,250 (3% discount)
$25,000 x 0.98 = $24,500 (2% discount)

Since the payment of $15,000 is made on March 26, which is within 10 days, a 3% discount applies. This means that the payment covers:

$15,000 / 0.97 = $15,463.92

The outstanding balance after this payment is:

$25,000 - $15,463.92 = $9,536.08

Therefore, the best choice is E, which is the closest to the calculated outstanding balance.

Question 5

What single discount rate is equivalent to multiple discounts of 20%, 5%, 2%?
A) 25.52%
B) 27%
C) 63%
D) 74.48%
E) 23.97%

Accepted Answer

To find the equivalent discount rate, we use the formula:

Equivalent discount rate = 1 - (1-0.2)(1-0.05)(1-0.02)
                                = 1 - 0.752
                                = 0.248 or 24.8%

To get the answer in percentage form, we multiply by 100:

Equivalent discount rate = 24.8%

Therefore, the answer is A) 25.52%, which is closest to 24.8%.

Question 6

An invoice for $35,000 dated March 15 with terms 3/10, 2/20, n/30, ROG was received in the mail on March 18. The shipment of goods was received on April 3. What payment April 14 would reduce the outstanding balance to $25,000?
A) $9,700
B) $10,000
C) $9800
D) $10,200
E) $10,300

Accepted Answer

The terms 3/10, 2/20, n/30, ROG indicate that discounts are available if payment is made within certain days after the receipt of goods (ROG). Since the goods were received on April 3, the discounts are no longer applicable by April 14, making it a net payment situation (n/30). To reduce the outstanding balance to $25,000, the payment made must cover the difference between the original amount and the desired balance, which is $35,000 - $25,000 = $10,000. However, since no discounts apply, the full payment to reduce the balance to $25,000 is exactly $10,000, making option C ($9,800) incorrect and the correct answer not listed among the options provided.

Question 7

An invoice for $45,780 has terms of 3/15, n/90. The date of the invoice is March 10. What payment on March 23 would be enough to settle the debt?
A) $44,407
B) $38,913
C) $41,660
D) $45,780
E) $44,219

Accepted Answer

The terms 3/15, n/90 mean that the buyer can take a 3% discount if the invoice is paid within 15 days. March 23 is within this 15-day period. To calculate the discounted amount: $45,780 * 0.03 = $1,373.40 discount. So, $45,780 - $1,373.40 = $44,406.60, which rounds to $44,407.

Question 8

An invoice for $620 dated November 5 with payment terms of 3/10, 2/15, n/30, was paid in full on November 15. What was the amount paid?
A) $18.60
B) $613.80
C) $620.00
D) $607.60
E) $601.40

Accepted Answer

The answer of An invoice for $620 dated November 5...

Question 9

An invoice dated October 16 has payment terms of 2/20, n/45. On what date would the cash discount expire?
A) October 26
B) November 30
C) November 5
D) October 18
E) December 7

Accepted Answer

The cash discount period is 20 days from the invoice date of October 16, which means the discount expires on November 5.

Question 10

If the trade discount series is 30% / 20% / 4% and the net price is $377, what is the list price?
A) $928
B) $1,335
C) $2,027
D) $701
E) $866

Accepted Answer

The answer of If the trade discount series is 30%...

Question 11

An invoice dated January 22 has payment terms of 3/25, n/90. On what date would the cash discount expire?
A) February 1
B) February 16
C) February 28
D) March 3
E) April 22

Accepted Answer

The payment terms "3/25, n/90" mean that the buyer can receive a 3% discount if the invoice is paid within 25 days of the invoice date, otherwise the full amount is due within 90 days of the invoice date.

To find the date the cash discount expires, we need to add 25 days to the invoice date:

January 22 + 25 days = February 16

Therefore, the cash discount would expire on February 16. So, the best choice is B.

Question 12

What single rate of discount would be equivalent to a series of 25%/18%/10%?
A) 55.4%
B) 53.0%
C) 41.7%
D) 34.3%
E) 44.7%

Accepted Answer

To find the single equivalent discount rate for a series of discounts, we use the formula for successive discounts: $ \text{Net Price Factor} = (1 - d_1)(1 - d_2)(1 - d_3) $, where $d_1, d_2, $ and $d_3$ are the decimal forms of the discounts. For 25%, 18%, and 10%, we have $d_1 = 0.25$, $d_2 = 0.18$, and $d_3 = 0.10$. Thus, the Net Price Factor = $(1 - 0.25)(1 - 0.18)(1 - 0.10) = 0.75 \times 0.82 \times 0.90$. Calculating this gives a Net Price Factor of approximately 0.553. The equivalent single discount is $1 - \text{Net Price Factor} = 1 - 0.553 = 0.447$ or 44.7%.

Question 13

An invoice for $6,000 dated September 1 with terms 2/10, 1½/20, n/30 is received in the mail on September 3^rd. A payment of $3,000 is made on September 12^th. What is the outstanding balance? A) $3,000 B) $2,955 C) $2,940 D) $3,060 E) $3,045

Accepted Answer

The payment of $3,000 is made within the 10-day period, qualifying for a 2% discount. Thus, $3,000 - 2% of $3,000 ($60) = $2,940 paid. The outstanding balance is $6,000 - $2,940 = $3,060, but since the payment took advantage of the discount, the actual outstanding balance is $6,000 - $3,000 = $3,000, less the discount of $60, resulting in $2,940 still owed. However, since the question asks for the outstanding balance after a payment of $3,000, and considering the discount was applied to the payment, not the balance, the correct interpretation leads to an outstanding balance of $3,000 without subtracting the discount from the remaining balance. Therefore, the correct answer reflects a misunderstanding in the explanation process, aiming to clarify the calculation mistake. The correct outstanding balance after applying the discount correctly to the payment, not the remaining balance, should be $3,000 - the discount, which was mistakenly subtracted after the payment. The correct answer should reflect the balance after payment, not considering the discount as a direct deduction from the remaining balance but as a reduction in the payment amount, leading to an initial misunderstanding in the explanation provided.

Question 14

An invoice for $20,000 dated March 15 with terms 3/10, 2/20, n/30 is received in the mail on March 17^th. A payment of $10,000 is made on March 26. How much is credited to the account? A) $10,204.08 B) $10,150 C) $9,800 D) $9,850 E) $10,000

Accepted Answer

The correct answer is A because the payment was made within the 10-day discount period, so the buyer is entitled to a 3% discount. The amount of the discount is $20,000 x 0.03 = $600. The amount credited to the account is $10,000 + $600 = $10,204.08.

Question 15

When does the credit period end?
A) March 26
B) April 15
C) April 16
D) April 21
E) none of these

Accepted Answer

The answer of When does the credit period end?
A) March...

Question 16

When does the discount period end?
A) March 26
B) April 15
C) April 16
D) April 21
E) none of these

Accepted Answer

The answer of When does the discount period end?
A) March...

Question 17

An invoice for $50,000 dated March 15 with terms 3/10, 2/20, n/30 is received in the mail on March 17. If the company wants to reduce the outstanding balance to $25,000, how much should they pay on March 26?
A) $24,250
B) $25,000
C) $24,500
D) $25,500
E) $25,750

Accepted Answer

The terms 3/10, 2/20, n/30 mean that the buyer can take a 3% discount if paid within 10 days, 2% discount if paid within 20 days, and the full amount is due in 30 days. To reduce the outstanding balance to $25,000, the buyer needs to pay $25,000 + 3% discount + 2% discount = $24,500. They should make this payment on or before March 25 (10 days from receiving the invoice on March 17) to take advantage of the full 3% discount. If they wait until March 26, they will only be eligible for the 2% discount, so they should still pay $24,500.

Question 18

The payment terms on a $2,433 invoice dated May 6 are 2/10, n/30. What payment on May 15 would pay off the debt?
A) $2,190
B) $2,433
C) $2,384
D) $1,845
E) $2,406

Accepted Answer

The discount of 2% is offered for payment made within 10 days, otherwise, the full invoice amount is due in 30 days. 
If the invoice is paid within 10 days (by May 16), the discount applies. Otherwise, the full amount is due by June 5 (30 days after May 6).

To calculate the discounted payment amount, multiply the invoice amount by the complement of the discount:

$2,433 x (1 - 0.02) = $2,384.34

Therefore, the payment on May 15 would need to be $2,384.34 to take advantage of the discount and pay off the debt.

Choice A, $2,190, is too low because it does not take into account the discount. 
Choice B, $2,433, is the full invoice amount and does not take into account the discount. 
Choice D, $1,845, is lower than the discounted amount and does not cover the full debt. 
Choice E, $2,406, is close to the discounted amount, but not accurate.

Question 19

If the trade discount series is 40%/15%/10% and the net price is $555, what is the list price?
A) $916
B) $1,209
C) $1,421
D) $708
E) $591

Accepted Answer

Let's start with the net price and work our way back to the list price:
Net Price = List Price x (1 - Trade Discount 1) x (1 - Trade Discount 2) x (1 - Trade Discount 3)

Substituting in the given values:
$555 = List Price x (1 - 0.40) x (1 - 0.15) x (1 - 0.10)

Simplifying:
$555 = List Price x 0.6 x 0.85 x 0.9
List Price = $1,209 (rounded to the nearest dollar)

Question 20

An invoice for $2,500 dated September 15 with terms 2/10, 1½/20, n/30, EOM is received in the mail on September 18. What payment will settle the invoice on October 11?
A) $2,450.00
B) $2,500.00
C) $2,200.00
D) $2,462.50
E) $2,125.00

Accepted Answer

The terms 2/10, 1½/20, n/30, EOM mean that the buyer can take a 2% discount if paid within 10 days, a 1.5% discount if paid within 20 days, and the full amount is due within 30 days, end of the month. 
Therefore, the discount period for the 2% discount is from September 15 to September 25 (10 days). 
The discount period for the 1.5% discount is from September 26 to October 5 (20 days). 
If the invoice is not paid within those periods, the full amount is due by the end of the following month (October 31).

If the buyer pays within the 2% discount period:
Discount = 0.02 x $2,500 = $50.00
Discounted price = $2,500 - $50 = $2,450.00

If the buyer pays within the 1.5% discount period:
Discount = 0.015 x $2,500 = $37.50
Discounted price = $2,500 - $37.50 = $2,462.50

Therefore, if the buyer pays on October 11, which is within the 1.5% discount period, the payment should be $2,462.50.

Quiz 4: Mathematics of Merchandising

An invoice for $7,000 dated September 1 with terms 2/10, 1½/20, n/30 is received in the mail on September 3. If the company wants to reduce the outstanding balance to $4,000, how much should they pay on September 12?

What single rate of discount would be equivalent to a series of 15% / 8% / 4%?

The list price of a garden tractor is $2,899. The trade discount series is 20%/12%. Calculate the net price of the tractor.

An invoice for $25,000 dated March 15 with terms 3/10, 2/20, n/30 is received in the mail on March 17. A payment of $15,000 is made on March 26. What is the outstanding balance?

What single discount rate is equivalent to multiple discounts of 20%, 5%, 2%?

An invoice for $35,000 dated March 15 with terms 3/10, 2/20, n/30, ROG was received in the mail on March 18. The shipment of goods was received on April 3. What payment April 14 would reduce the outstanding balance to $25,000?

An invoice for $45,780 has terms of 3/15, n/90. The date of the invoice is March 10. What payment on March 23 would be enough to settle the debt?

An invoice for $620 dated November 5 with payment terms of 3/10, 2/15, n/30, was paid in full on November 15. What was the amount paid?

An invoice dated October 16 has payment terms of 2/20, n/45. On what date would the cash discount expire?

If the trade discount series is 30% / 20% / 4% and the net price is $377, what is the list price?

An invoice dated January 22 has payment terms of 3/25, n/90. On what date would the cash discount expire?

What single rate of discount would be equivalent to a series of 25%/18%/10%?

An invoice for $6,000 dated September 1 with terms 2/10, 1½/20, n/30 is received in the mail on September 3rd. A payment of $3,000 is made on September 12th. What is the outstanding balance?

An invoice for $20,000 dated March 15 with terms 3/10, 2/20, n/30 is received in the mail on March 17th. A payment of $10,000 is made on March 26. How much is credited to the account?

When does the credit period end?

When does the discount period end?

An invoice for $50,000 dated March 15 with terms 3/10, 2/20, n/30 is received in the mail on March 17. If the company wants to reduce the outstanding balance to $25,000, how much should they pay on March 26?

The payment terms on a $2,433 invoice dated May 6 are 2/10, n/30. What payment on May 15 would pay off the debt?

If the trade discount series is 40%/15%/10% and the net price is $555, what is the list price?

An invoice for $2,500 dated September 15 with terms 2/10, 1½/20, n/30, EOM is received in the mail on September 18. What payment will settle the invoice on October 11?

An invoice for $6,000 dated September 1 with terms 2/10, 1½/20, n/30 is received in the mail on September 3^rd. A payment of $3,000 is made on September 12^th. What is the outstanding balance?

An invoice for $20,000 dated March 15 with terms 3/10, 2/20, n/30 is received in the mail on March 17^th. A payment of $10,000 is made on March 26. How much is credited to the account?