Deck 7: Discounts: Trade and Cash

Question 1

A radio with a net price of $700 and a trade discount rate of 30% has a list price of $1,000.

Answer 1

True

Question 2

Amounts of trade discounts are not fixed.

Answer 2

True

Question 3

Trade discounts represent increases to the purchase price.

Answer 3

False

Question 4

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

Question 5

Net price plus amount of trade discount equals list price.

Question 6

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

Question 7

A single equivalent discount rate of .45975 means the buyer saves approximately 46 cents per $1 of list price.

Question 8

The complement of 10% is 90%, or in decimal .90.

Question 9

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

Question 10

The single equivalent discount rate is found by taking the net price equivalent rate and adding it to 1.

Question 11

Net price times rate of trade discount equals amount of trade discount.

Question 12

The trade discount results if the customer pays the bill within the discount period.

Question 13

The complement of 25% is 52%.

Question 14

Sellers' catalogs list only the net price.

Question 15

Net price times single equivalent discount rate equals amount of trade discount.

Question 16

Chain discounts sometimes may be added together.

Question 17

Trade discounts sometimes are taken on freight.

Question 18

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

Question 19

A net price equivalent rate of .74225 means that for each $10 the buyer's cost will be approximately 74 cents.

Question 20

The portion could represent the amount of trade discount in the portion formula.

Question 21

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

Question 22

The net price equivalent rate of 9/15/18 is:

A).36573
B).63573
C).36427
D).63427
E)None of these

Question 23

Knuckles on your hand represent months with 30 days.

Question 24

The net price equivalent rate of 10/20/5 is .684.

Question 25

Feb. 15 is 71 days from Nov. 29.

Question 26

Cash discounts are not taken on freight or returned goods.

Question 27

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

Question 28

FOB shipping point means the seller pays cost of freight.

Question 29

Amount of trade discount is represented by the:

A)Base
B)Rate
C)Portion
D)Base divided by rate
E)None of these

Question 30

A discount period is always greater than the credit period.

Question 31

Those making partial payments are not allowed to take a cash discount.

Question 32

Trade discounts must be paid within the cash discount period.

Question 33

Goods sold after the 25^th of the month with terms of 2/10, EOM results in the discount period being extended 10 days longer.

Question 34

Which of the following is usually not true about customer catalogs?

A)Contain list price
B)Completely updated once a year with a new revised catalog
C)Updated by discount sheets
D)Trade discount amounts will differ from product to product
E)None of these

Question 35

The single equivalent discount rate of 9/5/4 is .17008.

Question 36

The complement of 35% is:

A)53%
B)65%
C)56%
D)165%
E)None of these

Question 37

Amount of trade discount equals:

A)List price × trade discount rate
B)List price + trade discount rate
C)List price divided by trade discount rate
D)Net price × trade discount rate
E)None of these

Question 38

If the net price of a stove is $900 and the trade discount rate is 40%, the list price is:

A)$3,600
B)$2,250
C)$1,500
D)$1,260
E)None of these

Question 39

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

Question 40

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

Question 41

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

A).0273
B).784827
C).488173
D)215173
E)None of these

Question 42

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:

A)$15,000
B)$15,500
C)$15,625
D)$2,500
E)None of these

Question 43

The complement of 17% is:

A)71%
B)60%
C)83%
D)38%
E)None of these

Question 44

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:

A)$16,762.27
B)$16,000.55
C)$15,762.72
D)$16,000.84
E)None of these

Question 45

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?

A)$11,640
B)$8,544
C)$8,644
D)$11,940
E)None of these

Question 46

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:

A)$270
B)$1,170
C)$630
D)$360
E)None of these

Question 47

With terms of 2/10, n/30:

A)Credit period is 10 days from date of invoice
B)Credit period is 40 days
C)Credit period extends into first 10 days of next month
D)Credit period is 30 days from date of invoice
E)None of these

Question 48

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

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

Question 49

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:

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

Question 50

The credit period is:

A)Always shorter than the discount period
B)Always 30 days from end of discount
C)Always twice the length of discount period
D)Long enough so buyers can always take a cash discount
E)None of these

Question 51

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:

A)$122,709.60
B)$26,970.40
C)$26,790.40
D)$122,907.69
E)None of these

Question 52

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

A).09712
B).90288
C).00002
D).99998
E)None of these

Question 53

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:

A)$3,537.12
B)$3,537.21
C)$3,391.12
D)$3,357.21
E)None of these

Question 54

Which month has 30 days?

A)January
B)May
C)June
D)July
E)None of these

Question 55

FOB shipping point means:

A)Seller pays the cost of freight
B)Buyer pays the cost of freight
C)Title to goods shifts to buyer while being shipped
D)Seller cannot pay cost of freight
E)None of these

Question 56

Cash discounts are:

A)Always calculated on list price
B)Sometimes calculated with freight
C)Sometimes calculated with returned goods
D)Never calculated on freight and returns
E)None of these

Question 57

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:

A)$765.31
B)$765.30
C)$757.58
D)$757.59
E)None of these

Question 58

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%.

A)$8,232
B)$8,382
C)$8,385
D)$8,832
E)None of these

Question 59

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

A)May 10
B)April 10
C)May 30
D)May 31
E)None of these

Question 60

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.

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

Question 61

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?

Question 62

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?

Question 63

Bloomberg's is offered the following chain discount(s); what is the lowest net price equivalent rate it will pay?

Question 64

Which option yields the highest single equivalent discount?

Question 65

Marvin Gate bought some fencing from a wholesaler for $6,000. The wholesaler offered a trade discount of 35%. What was the original price? (Round to the nearest cent.)

Question 66

If a manufacturer's list price is $800 and Bill's Outlet buys the goods for $650, what is the trade discount percent? (Round answer to the nearest hundredth percent.)

Question 67

Brooks Brothers bought a suit that has a list price of $1,219, with a chain discount of 7/4/2. What is the net price of the suit?

A)$682.64
B)$1,166.65
C)$1,066.56
D)$152.44
E)None of these

Question 68

Walgreens is offered a chain discount on cosmetics from Libby Corp. of 8/5/2; Roma Company offers a chain discount of 7/6/4. What is the highest discount offered?

A).14348
B).839232
C).85652
D).160768
E)None of these