Question 1

The actual credit one receives in making a partial payment is calculated by taking the partial payment and dividing by (1 + the discount rate).

Accepted Answer

A) True 
 B)False  False

Question 2

Morgan Company received from Lee Company an invoice dated September 27. Terms were 2/10 EOM. List price on the invoice was $5,000 (freight not included). Morgan receives a 9/7 chain discount. Freight charges are Morgan's responsibility, but Lee agreed to prepay the $150 freight charge. Morgan pays the invoice on November 9. What does Morgan pay Lee?

Free

(Essay)

4.8/5

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Question 2

Correct Answer:

Verified

$4,296.87
.93 × .91 = .8463

Accepted Answer

$4,296.87
.93 × .91 = .8463

Question 3

Net price plus amount of trade discount equals list price.

Accepted Answer

A) True 
 B)False  True

Question 4

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

A) $2,640 
B) $2,460 
C) $2,440 
D) $3,750 
E) None of these 
A) $2,640 
B) $2,460 
C) $2,440 
D) $3,750 
E) None of these

Question 5

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

A) $8,247.42 
B) $41,752.58 
C) $8,240.00 
D) $41,760.00 
E) None of these 
A) $8,247.42 
B) $41,752.58 
C) $8,240.00 
D) $41,760.00 
E) None of these

Question 6

Feb. 15 is 71 days from Nov. 29.

Accepted Answer

A) True 
 B)False

Question 7

FOB shipping point means the seller pays cost of freight.

Accepted Answer

A) True 
 B)False

Question 8

The net price equivalent rate should be rounded to the nearest hundredth.

Accepted Answer

A) True 
 B)False

Question 9

Pete's appliance received a bill dated July 15 for $26,000 with terms of 2/10, 1/15, n/60. On July 27 Pete sent in a partial payment of $6,000. What is the amount credited as well as the balance due?

Accepted Answer

$6,060.61

Question 10

A cash discount is a reduction from the gross amount of the invoice if payment is made within the discount period.

Accepted Answer

A) True 
 B)False

Question 11

Which option yields the highest single equivalent discount?

Accepted Answer

The answer of Which option yields the highest single equivalent...

Question 12

Trade discounts represent increases to the purchase price.

Accepted Answer

A) True 
 B)False

Question 13

Trade discounts must be paid within the cash discount period.

Accepted Answer

A) True 
 B)False

Question 14

A cash discount sometimes is taken on the amount of trade discount.

Accepted Answer

A) True 
 B)False

Question 15

A chain discount is a series of three or more successive discounts.

Accepted Answer

A) True 
 B)False

Question 16

List price × trade discount rate = amount of trade discount.

Accepted Answer

A) True 
 B)False

Question 17

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

A) .7221: Manufacturer A 
B) .7216: Manufacturer B 
C) .2779: Manufacturer A 
D) .2784: Manufacturer A 
E) None of these 
A) .7221: Manufacturer A 
B) .7216: Manufacturer B 
C) .2779: Manufacturer A 
D) .2784: Manufacturer A 
E) None of these

Question 18

Sellers' catalogs list only the net price.

Accepted Answer

A) True 
 B)False

Question 19

Sometimes the seller will prepay the freight if it is FOB destination.

Accepted Answer

A) True 
 B)False

Question 20

The net price equivalent rate helps one calculate the actual cost to the seller.

Accepted Answer

A) True 
 B)False

Exam 7: Discounts: Trade and Cash

The actual credit one receives in making a partial payment is calculated by taking the partial payment and dividing by (1 + the discount rate).

Net price plus amount of trade discount equals list price.

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

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:

Feb. 15 is 71 days from Nov. 29.

FOB shipping point means the seller pays cost of freight.

The net price equivalent rate should be rounded to the nearest hundredth.

Pete's appliance received a bill dated July 15 for $26,000 with terms of 2/10, 1/15, n/60. On July 27 Pete sent in a partial payment of $6,000. What is the amount credited as well as the balance due?

A cash discount is a reduction from the gross amount of the invoice if payment is made within the discount period.

Which option yields the highest single equivalent discount?

Trade discounts represent increases to the purchase price.

Trade discounts must be paid within the cash discount period.

A cash discount sometimes is taken on the amount of trade discount.

A chain discount is a series of three or more successive discounts.

List price × trade discount rate = amount of trade discount.

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.

Sellers' catalogs list only the net price.

Sometimes the seller will prepay the freight if it is FOB destination.

The net price equivalent rate helps one calculate the actual cost to the seller.

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