Question 1

The net price equivalent rate of 3/7/13 is:

Accepted Answer

The answer of The net price equivalent rate of 3/7/13...

Question 2

A local college bookstore paid a net price of $12,500 for textbooks for the coming semester. The publisher offered a trade discount of 20%. The publisher's original list price was:

Accepted Answer

The net price after a 20% discount is 80% of the list price. So, $12,500 is 80% of the list price. To find the list price, divide $12,500 by 0.80, which equals $15,625.

Question 3

The complement of 17% is:

Accepted Answer

The complement of 17% is what percent is needed to add to 17% in order to equal 100%. So, 100%-17% = 83%. Therefore, the answer is C) 83%.

Question 4

An invoice dated 5/19/xx received by Jones Supply indicated a balance of $17,000. This balance included a freight charge of $1,000. Terms of the bill were 5/10, 4/30, n/60. Assuming Jones pays off the bill on June 4, he pays:

Accepted Answer

Jones pays off the bill on June 4, which falls within the 4/30 terms (4% discount if paid within 30 days). The original balance is $17,000, including a freight charge of $1,000. The discount should be applied to the balance minus the freight charge, as freight charges are typically not discounted. Thus, the discount is calculated on $16,000 ($17,000 - $1,000). A 4% discount on $16,000 is $640, so Jones would pay $16,000 - $640 = $15,360. None of the provided options match this calculation.

Question 5

J.C. Penney of Boston sold office equipment for $12,000 to Lee's of San Diego. Terms of the sale are 3/10, n/30 FOB Boston. J.C. Penney has agreed to prepay freight $300. Assuming Lee's pays within the discount period, how much will Lee's pay J.C. Penney?

Accepted Answer

The answer of J.C. Penney of Boston sold office equipment...

Question 6

Roland Corporation buys stoves from a wholesaler. The list price of a stove is $900, with a trade discount of 30%. The net price is:

Accepted Answer

To find the net price, we need to apply the trade discount:

Trade discount = List price * Discount rate
Trade discount = $900 * 0.30 = $270

Net price = List price - Trade discount
Net price = $900 - $270 = $630

Therefore, the net price of the stove is $630. The correct answer is C.

Question 7

With terms of 2/10, n/30:

Accepted Answer

The terms 2/10, n/30 mean that the buyer will receive a 2% discount if the invoice is paid within 10 days of the invoice date. The full amount is due within 30 days of the invoice date. Therefore, the credit period is 30 days from the date of the invoice.

Question 8

Brenda purchased a total of five computers for $3,300. She received a 20% trade discount. What did Brenda pay for the computers?

Accepted Answer

The original price of the computers was $3,300. After receiving a 20% trade discount, Brenda paid 80% of the original price (100% - 20% = 80%). So, $3,300 * 0.80 = $2,640.

Question 9

An invoice dated March 12 in the amount of $50,000 is received by Reliance Corporation on March 16. Cash discount terms on the invoice are 3/10, n/30. On March 16 Reliance mails a check in the amount of $8,000 as partial payment on the invoice. The outstanding balance owed on the invoice is:

Accepted Answer

The answer of An invoice dated March 12 in the...

Question 10

The credit period is:

Accepted Answer

The length of the credit period can vary and is not always related to the discount period. It depends on the agreement between the buyer and seller.

Question 11

A manufacturer of skis offered chain discounts of 10/5/4 to many of its customers. Joe Jones ordered skis that had a total list price of $149,500. The amount of the trade discount is:

Accepted Answer

The chain discounts of 10/5/4 means the discounts will be applied in three stages:
- First, a discount of 10% will be applied to the list price.
- Then, a discount of 5% will be applied to the new, discounted price.
- Finally, a discount of 4% will be applied to the new, discounted price.
To find the amount of the trade discount, we need to calculate the final price Joe Jones will pay after all the discounts have been applied. 
1. First discount of 10%: 
$149,500 x 0.10 = $14,950 (amount of discount)
$149,500 - $14,950 = $134,550 (price after first discount)
2. Second discount of 5%: 
$134,550 x 0.05 = $6,727.50 (amount of discount)
$134,550 - $6,727.50 = $127,822.50 (price after second discount)
3. Third discount of 4%: 
$127,822.50 x 0.04 = $5,112.90 (amount of discount)
$127,822.50 - $5,112.90 = $122,709.60 (final price after all discounts)

Therefore, the amount of the trade discount is $149,500 - $122,709.60 = $26,790.40. Hence, the correct answer is C.

Question 12

The single equivalent discount rate of the trade discount 5/4/1 is:

Accepted Answer

Using the formula for single equivalent discount rate:
SED = (1 - (1-d1)(1-d2)...(1-dn)) x 100%
Where d1, d2, ..., dn are the decimal equivalents of the trade discounts in the chain.
For 5/4/1, we have:
d1 = 5/100 = 0.05
d2 = 4/100 = 0.04
d3 = 1/100 = 0.01
SED = (1 - (1-0.05)(1-0.04)(1-0.01)) x 100%
SED = 0.09712 or 9.712%
Therefore, the best choice is A.

Question 13

Black & Decker Manufacturing sold a set of saws to True Value Hardware. The list price was $3,800. Black & Decker offered a chain discount of 8/3/1. The net price of the saws is:

Accepted Answer

The answer of Black & Decker Manufacturing sold a set...

Question 14

Which month has 30 days?

Accepted Answer

The answer of Which month has 30 days?
...

Question 15

FOB shipping point means:

Accepted Answer

FOB shipping point means that the buyer pays the cost of freight and takes ownership of the goods once they are loaded onto the carrier's vehicle.

Question 16

Cash discounts are:

Accepted Answer

The answer of Cash discounts are:
...

Question 17

Joanne's Dress Shop received an invoice dated July 25 for $1,400, with terms of 2/10, 1/15, n/60. On August 8, Joanne's Dress Shop sent a partial payment of $750. The actual amount that should be credited is:

Accepted Answer

To find the actual amount that should be credited, we need to calculate the remaining balance after the partial payment and apply any applicable discounts.

Remaining balance after partial payment = $1,400 - $750 = $650

Since the payment was made within 10 days, the 2% discount can be applied:
Discount = 0.02 x $650 = $13

Balance after discount = $650 - $13 = $637

Therefore, the actual amount that should be credited is $757.58 (which is option C).

Question 18

A bedroom set lists for $12,000 and carries a trade discount of 30%. Freight (FOB shipping point) of $150 is not part of list price. Calculate the delivered price of the bedroom set including the freight. Assume a cash discount of 2%.

Accepted Answer

The answer of A bedroom set lists for $12,000 and...

Question 19

An invoice dated March 6 with terms of 1/10, EOM results in the end of the discount period on:

Accepted Answer

1/10, EOM means that the buyer can take a 1% discount if they pay within 10 days of the end of the month. Therefore, the end of the discount period is April 10, as it is 10 days after the end of March.

Question 20

A local RadioShack store wants to buy a new line of plasma TVs. Manufacturer A offers chain discounts of 18/12, and Manufacturer B offers terms of 17/13. The single equivalent discount rate of ? is the best deal.

Accepted Answer

The answer of A local RadioShack store wants to buy...

Quiz 7: Discounts: Trade and Cash