Calculate the Cash Price with an Ordinary Dating Discount

Introduction

The computing the cash price with an ordinary dating discountconcept is explained as follows:
An invoice gives the details of each purchase made from a supplier. As an incentive to pay early, the supplier may offer a cash discount if the bill is paid within a certain number of days. The exact terms of the discount are stated on the invoice. Many suppliers use ordinary dating. If the invoice says 3/10, net 30 (or 3/10, n/30), that means there is a 3 percent cash discount if paid within 10 days and the net price must be paid within 30 days.

Example: Find the cash price.

Zoho Appliances received an invoice from its supplier. The net total for a super freezer was $1,175 and payment terms stated 2/15, net 30. What is the cash price of the super freezer if Zoho Appliances pays within 15 days?
  1. Find the cash discount. Answer = $1,175 × 2% = $23.50
  2. Find the cash price. Answer = Cash Price = Net Price − Cash Discount OR Cash Price = Net Price × Complement of Cash-Discount Rate
  3. Cash Price = $1,175 − $23.50 = $1,151.50

Practice:

Find the last date to take the discount, the last day to pay the invoice, the cash discount, and the cash price.
Cash Price
Invoice Date Terms Last Date to Take Discount Last Date to Pay Invoice Paid Date Net Price Cash Discount Cash Price
4/15 3/10,n/30 ??? ??? 4/21 $391 ??? ???
2/7 2/15,n/30 ??? ??? 2/17 $510 ??? ???
3/15 1/10,n/30 ??? ??? 3/21 $990 ??? ???



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