Mathematics of Buying

1
Mathematics of Buying

• Cash Discounts Other Methods

2
Objective 1

• Solve Cash Discount Problems with EOM dating.

3
End-of-Month Dating
Objective 1

• 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.
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End-of-Month Dating 1 of 2
Objective 1

• Invoice is dated January 14.
• Terms are 2/10 EOM
• Final Discount date _____
• Net Payment date _____

January
February
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Objective 1
End-of-Month Dating 2 of 2

• Invoice is dated April 26.
• Terms are 3/15 EOM
• Final Discount date _____
• Net Payment date _____

April
May
June
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End-of-Month Dating Summary
Objective 1

• 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.

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Proximo
Objective 1

• Invoice Amt 356.20
• Invoice Date May 17
• Terms 3/15 prox.
• Date Invoice is paid June 12
• Amount of Discount _____
• Amount Due _____

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Objective 2

• Receipt of Goods Dating

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Receipt-of-Goods Method
Objective 2

• Cash discounts due dates are computed based upon
  when the goods are received.
• Used when shipping times are lengthy.

3/15 ROG
Invoice Date May 21 Terms 3/15 ROG Delivery
Date June 20 Discount Due Date ________
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ROG
Objective 2

• 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 ________

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Objective 2
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 ________

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ROG Summary
Objective 2

• 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.

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Objective 3

• Extra Dating Method

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Extra Dating Method
Objective 3

• 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
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Extra Dating 1 of 2
Objective 3

• Invoice Date Nov 22
• Terms 1/10-20 x
• Final Discount Date ________
• Net Payment Date ________

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Objective 3
Extra Dating 2 of 2

• Invoice Date April 12
• Terms 3/15-50 ex.
• Final Discount Date ________
• Net Payment Date ________

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Objective 4

• Determine credit given for partial payment of an
  invoice.

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Partial Payments
Objective 4

• 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.

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Partial Payments
Objective 4

• Analysis of a Partial Payment

Terms 2/10
100
2
98
Invoice Amount Cash Discount Net Amount Paid
Invoice 100 Terms 2/10 A payment of 98 will
pay off the 100 invoice.
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Objective 4
Partial Payments 1 of 3
Invoice 100 Terms 2/10 Partial Payment
50 Credit Given ?
100
2
98
Credit Given Discount Partial Payment Amount
21
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
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Partial Payments 3 of 3
Objective 4

• 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.

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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.

24
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.

25
Partial Payments Extra Practice
Objective 4

• Problem 24, page 251
• Yogurt for You receives an invoice amounting to
  263.40 with terms of 2/20 EOM and dated
  September 6. If a partial payment of 150 is
  made on October 14, find (a) the credit given for
  the partial payment and (b) the balance due on
  the invoice.

26
Objective 4
Partial Payments Extra Practice

• Problem 24, page 251
• Yogurt for You receives an invoice amounting to
  263.40 with terms of 2/20 EOM and dated
  September 6. If a partial payment of 150 is
  made on October 14, find (a) the credit given for
  the partial payment and (b) the balance due on
  the invoice.

27
Objective 4
Partial Payments Extra Practice

• Problem 24, page 251
• Yogurt for You receives an invoice amounting to
  263.40 with terms of 2/20 EOM and dated
  September 6. If a partial payment of 150 is
  made on October 14, find (a) the credit given for
  the partial payment and (b) the balance due on
  the invoice.