Entrepreneurship and Small Business Management

Cash Discounts-Ordinary Dating

You receive an invoice for each purchase you make from a supplier. The invoice lists the quantities and costs of the items purchased. To encourage prompt payment, some suppliers offer a cash discount if the bill is paid within a certain number of days. The exact terms of the discount are printed on the invoice and are often written in an abbreviated format called ordinary dating. Ordinary dating is written in this format:

2/10, net 30 ?or? 2/10, n/30

This abbreviation means you will receive a 2% cash discount if you pay the total within 10 days of the date of invoice and the net price must be paid within 30 days of date of invoice.

Cash Discount = Net Price x Cash-Discount RateCash Price = Net Price - Cash Discount

1.		ALight, Inc. received an invoice dated July 7 from their lamp supplier that totaled $1,056.10. The terms on the invoice said "2/10, net 30." What is the last day ALight can pay the invoice and still receive the cash discount?
			A)	July 9
			B)	August 6
			C)	July 17
			D)	July 29
2.		In problem 1, what is the cash discount ALight will receive if they pay the invoice on July 9?
			A)	$10.56
			B)	$211.22
			C)	$10.00
			D)	$21.12
3.		In problem 1, what is the cash price of the shipment of lamps if ALight pays on July 9?
			A)	$1,034.98
			B)	$1,046.10
			C)	$844.88
			D)	$1,056.10
4.		If the terms of an invoice are 3/10, n/30 and the net price is $530, what is the cash discount?
			A)	$15.90
			B)	$53.00
			C)	$19.50
			D)	$159.00
5.		In problem 4, what is the cash price after the discount is taken?
			A)	$371
			B)	$514.10
			C)	$429.10
			D)	$526.50
6.		The terms of an invoice dated January 1 are 2/15, n/30. The net price is $73.20, and the invoice is paid on January 17. What is the amount of discount received?
			A)	$0.73
			B)	$0.00
			C)	$1.46
			D)	$10.98
7.		An invoice is dated 3/19, and its terms are 5/10, net 30. The net price is $2281.79. The invoice is paid on March 25. What is the amount of cash discount received?
			A)	$228.18
			B)	$68.45
			C)	$114.09
			D)	$136.90
8.		In problem 7, what is the discounted price?
			A)	$2,144.89
			B)	$2,053.61
			C)	$2,213.34
			D)	$2,167.70
9.		Geraldo receives an invoice for a net price of $853.25. The terms are 4/12, n/30. He pays the invoice within one week. What is the cash discount?
			A)	$102.39
			B)	$25.60
			C)	$34.13
			D)	$4.99
10.		In problem 9, what is the cash price Geraldo pays?
			A)	$819.12
			B)	$799.25
			C)	$751.25
			D)	$801.02
11.		The net price of goods from Women's Wardrobe, Inc. to Fiona's is $3,577.20. If the invoice is dated December 9 and has terms of 3/15, n/30, what is the cash discount if Fiona's pays on December 17?
			A)	$0.00
			B)	$536.58
			C)	$47.78
			D)	$107.32
12.		What is the discount price in problem 11?
			A)	$3,469.88
			B)	$3,000.20
			C)	$3,577.20
			D)	$3,530.21
13.		The net price of goods from Sport Utility Footwear to First Street Footery was $2,198.50. The invoice is dated May 25 and the terms are 4/15, n/30. What is the last day a discount can be taken?
			A)	May 29
			B)	May 40
			C)	June 5
			D)	June 9
14.		In problem 13, what is the amount of cash discount if the invoice is paid in time?
			A)	$21.99
			B)	$87.94
			C)	$65.44
			D)	$122.98
15.		In problem 14, what would be the cash price if the invoice was paid within 15 days?
			A)	$2,177.50
			B)	$2,076.01
			C)	$2,110.56
			D)	$2,133.06
16.		Ace Machinery sends a shipment to Carlton Machine Shop along with an invoice for $987.32. The terms on the invoice are 2.7/10, n/30. What is the cash discount if Carlton Machine Shop pays within 10 days?
			A)	$9.87
			B)	$18.99
			C)	$26.66
			D)	$27.54
17.		What is the cash price in problem 16 if the cash discount is taken?
			A)	$960.66
			B)	$964.20
			C)	$887.32
			D)	$987.32
18.		The net price of a stationery shipment from All in the Cards suppliers was $562.71. The invoice is dated April 29 and the terms of the invoice are 2/12, net 30. What is the last day a discount can be taken?
			A)	April 31
			B)	May 1
			C)	May 11
			D)	May 29
19.		In problem 18, what is the amount of cash discount if the invoice is paid in time?
			A)	$12.24
			B)	$11.25
			C)	$13.50
			D)	$16.71
20.		In problem 18, what would be the cash price if All in the Cards pays the invoice within 12 days?
			A)	$555.77
			B)	$423.87
			C)	$529.10
			D)	$551.46