Discounts: Trade and Cash Exam Prep Ch.7 - Business Math Procedures 13e Test Bank with Answers by Jeffrey Slater. DOCX document preview.
Practical Business Math Procedures, 13e (Slater)
Chapter 7 Discounts: Trade and Cash
1) List price × trade discount rate = amount of trade discount.
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
2) Trade discounts represent increases to the purchase price.
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
3) Sellers' catalogs list only the net price.
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
4) The trade discount results if the customer pays the bill within the discount period.
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
5) Amounts of trade discounts are not fixed.
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
6) Trade discounts sometimes are taken on freight.
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
7) Net price times rate of trade discount equals amount of trade discount.
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
8) Net price plus amount of trade discount equals list price.
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (3) Find list price when net price and trade discount rate are known.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
9) The portion could represent the amount of trade discount in the portion formula.
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (3) Find list price when net price and trade discount rate are known.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
10) The complement of 25% is 52%.
Difficulty: 2 Medium
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
11) A radio with a net price of $700 and a trade discount rate of 30% has a list price of $1,000.
Difficulty: 2 Medium
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (3) Find list price when net price and trade discount rate are known.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
12) A chain discount is a series of three or more successive discounts.
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
13) Chain discounts sometimes may be added together.
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
14) The net price equivalent rate helps one calculate the actual cost to the seller.
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
15) The complement of 10% is 90%, or in decimal 0.90.
Difficulty: 2 Medium
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
16) The net price equivalent rate should be rounded to the nearest hundredth.
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
17) A net price equivalent rate of 0.74225 means that for each $10 the buyer's cost will be approximately 74 cents.
Difficulty: 2 Medium
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
18) The single equivalent discount rate is found by taking the net price equivalent rate and adding it to 1.
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
19) A single equivalent discount rate of 0.45975 means the buyer saves approximately 46 cents per $1 of list price.
Difficulty: 2 Medium
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
20) Net price times single equivalent discount rate equals amount of trade discount.
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
21) The net price equivalent rate of 10/20/5 is 0.684.
Difficulty: 2 Medium
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
22) The single equivalent discount rate of 9/5/4 is 0.17008.
Difficulty: 2 Medium
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
23) Trade discounts must be paid within the cash discount period.
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
24) A cash discount is a reduction from the gross amount of the invoice if payment is made within the discount period.
Difficulty: 1 Easy
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
25) A discount period is always greater than the credit period.
Difficulty: 1 Easy
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
26) Cash discounts are not taken on freight or returned goods.
Difficulty: 1 Easy
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
27) FOB shipping point means the seller pays cost of freight.
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (2) Explain the freight terms FOB shipping point and FOB destination.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
28) Sometimes the seller will prepay the freight if it is FOB destination.
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (2) Explain the freight terms FOB shipping point and FOB destination.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
29) Knuckles on your hand represent months with 30 days.
Difficulty: 1 Easy
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
30) 50 days from July 9 is August 28.
Difficulty: 2 Medium
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
31) Feb. 15 is 71 days from Nov. 29.
Difficulty: 2 Medium
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
32) A cash discount sometimes is taken on the amount of trade discount.
Difficulty: 1 Easy
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
33) 2/10, n/30 is an example of the ordinary dating method.
Difficulty: 1 Easy
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
34) 2/10, n/30 means the credit period is 30 days from the end of the discount period.
Difficulty: 1 Easy
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
35) 3/10, 1/15, n/30 means that a 3% cash discount is available from day 11 to day 15.
Difficulty: 1 Easy
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
36) 4/10, n/30, ROG means a 4% discount can be taken within 10 days before the receipt of goods.
Difficulty: 1 Easy
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
37) 2/10, EOM means that the cash discount period ends on the tenth day of the month that follows the sale, as long as the invoice is dated 25th or earlier in the month.
Difficulty: 1 Easy
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
38) 2/10, EOM means the credit period ends 20 days after the end of the discount period.
Difficulty: 1 Easy
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
39) Goods sold after the 25th of the month with terms of 2/10, EOM results in the discount period being extended 10 days longer.
Difficulty: 1 Easy
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
40) Those making partial payments are not allowed to take a cash discount.
Difficulty: 1 Easy
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (2) Calculate outstanding balance for partial payments.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
41) The actual credit one receives in making a partial payment is calculated by taking the partial payment and dividing by (1 + the discount rate).
Difficulty: 1 Easy
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (2) Calculate outstanding balance for partial payments.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
42) 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
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
43) 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
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
44) Amount of trade discount is represented by the:
A) Base
B) Rate
C) Portion
D) Base divided by rate
E) None of these
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
45) The complement of 35% is:
A) 53%
B) 65%
C) 56%
D) 165%
E) None of these
Difficulty: 2 Medium
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
46) If the net price of a stove is $900 and the trade discount rate is 40%, the list price is:
A) $360
B) $2,250
C) $1,500
D) $540
E) None of these
Difficulty: 2 Medium
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (3) Find list price when net price and trade discount rate are known.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
47) The net price equivalent rate of 9/15/18 is:
A) 0.36573
B) 0.63573
C) 0.36427
D) 0.63427
E) None of these
Difficulty: 2 Medium
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
48) The single equivalent discount rate of the trade discount 5/4/1 is:
A) 0.09712
B) 0.90288
C) 0.00002
D) 0.99998
E) None of these
Difficulty: 2 Medium
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
49) 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
Difficulty: 1 Easy
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
50) 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
Difficulty: 1 Easy
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
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
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (2) Explain the freight terms FOB shipping point and FOB destination.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
52) Which month has 30 days?
A) January
B) May
C) June
D) July
E) None of these
Difficulty: 1 Easy
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
53) 200 days from March 3 is:
A) September 18
B) September 17
C) September 19
D) September 20
E) None of these
Difficulty: 2 Medium
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
54) 60 days from Nov. 19 is:
A) Jan. 16
B) Jan. 17
C) Jan. 18
D) Jan. 19
E) None of these
Difficulty: 2 Medium
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
55) 2/10, n/30 is an example of:
A) Ordinary dating
B) Receipt of goods
C) End of month
D) Extra dating
E) None of these
Difficulty: 1 Easy
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
56) 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
Difficulty: 1 Easy
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
57) 2/10, n/30, ROG means the cash discount period ends:
A) Within 10 days of beginning date of invoice
B) Within 30 days of beginning date of invoice
C) 20 days after beginning date of invoice
D) 10 days after the goods are received
E) None of these
Difficulty: 1 Easy
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
58) 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
Difficulty: 2 Medium
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
59) 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
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
60) 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
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (3) Find list price when net price and trade discount rate are known.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
61) 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. Which single equivalent discount rate is the best deal?
A) 0.7221: Manufacturer A
B) 0.7216: Manufacturer B
C) 0.2779: Manufacturer A
D) 0.2784: Manufacturer A
E) None of these
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Analyze
Type: Static
Accessibility: Keyboard Navigation
62) 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
Difficulty: 3 Hard
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (2) Calculate outstanding balance for partial payments.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
63) 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
Difficulty: 3 Hard
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
64) 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
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
65) 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
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight); LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.; 07-01 (2) Explain the freight terms FOB shipping point and FOB destination.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
66) 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
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
67) 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
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight); LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.; 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.; 07-01 (2) Explain the freight terms FOB shipping point and FOB destination.
Bloom's: Analyze
Type: Static
Accessibility: Keyboard Navigation
68) 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
Difficulty: 3 Hard
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.; 07-02 (2) Calculate outstanding balance for partial payments.
Bloom's: Analyze
Type: Static
Accessibility: Keyboard Navigation
69) The complement of 17% is:
A) 71%
B) 60%
C) 83%
D) 38%
E) None of these
Difficulty: 2 Medium
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
70) The net price equivalent rate of 3/7/13 is:
A) 0.0273
B) 0.784827
C) 0.488173
D) 215173
E) None of these
Difficulty: 2 Medium
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
71) 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
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
72) 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) 0.14348
B) 0.839232
C) 0.85652
D) 0.160768
E) None of these
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Analyze
Type: Static
Accessibility: Keyboard Navigation
73) 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
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
Match the following terms with their definitions.
A) Criteria on invoice
B) Seller pays cost of freight
C) Could be calculated by table look-up
D) Savings from early payment
E) Cash discount within first 10 days in next month after sale
F) Amount of time to take advantage of a cash discount
G) Discount period begins when goods are received
H) 100% less stated percent
I) List price minus amount of trade discount
J) Time period sellers give buyers to pay invoices
K) 1 - net price equivalent rate
L) Buyer pays cost of freight
M) Actual cost to buyer per dollar
N) 2/10, n/30
O) Two or more trade discounts
P) List price minus net price
Q) Suggested retail price
74) Due dates
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
75) Credit period
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
76) 2/10, EOM (before 25th)
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
77) List price
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
78) Discount period
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
79) FOB shipping point
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
80) Cash discount
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
81) Net price equivalent rate
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
82) Example of ordinary dating
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
83) Complement
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
84) FOB destination
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
85) ROG
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
86) Terms of sale
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
87) Single equivalent discount rate
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
88) Net price
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
89) Amount of trade discount
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
90) Chain discount
Difficulty: 1 Easy
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
Answers: 74) C 75) J 76) E 77) Q 78) F 79) L 80) D 81) M 82) N 83) H 84) B 85) G 86) A 87) K 88) I 89) P 90) O
91) Complete the following:
Item | List Price | Trade Discount | Net Price |
Television | $900 | 30% | ? |
Multiply $900 by 70%.
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
92) Complete the following:
Item | List Price | Trade Discount | Net Price |
Smartphone | ? | 40% | $600 |
Divide $600 by 60%.
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (3) Find list price when net price and trade discount rate are known.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
93) Find amount of (A) net price and (B) trade discount
Item | List Price | Chain Discount | Net Price (A) | Trade Discount (B) |
Dishwasher | $1400 | 13/10/4 | ? | ? |
Multiply .87 by .9 by .96 to get a chain discount rate of .75168. Multiply the list price of $1,400 by this rate to get a net price of $1052.35, which shows a trade discount of $347.65.
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (3) Find list price when net price and trade discount rate are known.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
94) Which option yields the highest single equivalent discount?
Option A | Option B |
6/8/12 | 7/9/10 |
Multiply the complements of each rate times each other to see which option is greater. Option A is the better choice as you pay $76.10 per $100 (.761024); Option B you are paying $76.17 per $100 (.76167). Option A saves you .07 cents more per $100 than Option B.
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
95) Complete:
Item | List Price | Chain Discount | Net Price Equivalent Rate | Single Equivalent Discount Rate | Amount of Trade Discount | Net Price |
Rug | $1,400 | 18/12 | (A) | (B) | (C) | (D) |
B. 2784
C. $389.76
D. $1,010.24
Multiply .82 by .88 to get the chain discount rate of .7216. Subtract this rate from 1 to get the single EQ rate of .2784. Use these rates to calculate the trade discount and net price amounts.
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
96) Calculate (A) amount to be credited and (B) balance outstanding:
Invoice Amount | Terms | Invoice Date | Payment Amount | Date Paid | Amount to be credited | Balance Outstanding |
$3,000 | 2/10, n/30 | July 5th | $600 | July 14th | (A) | (B) |
Divide 600 by .98.
Difficulty: 3 Hard
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
97) Calculate (A) cash discount and (B) net amount paid:
Gross Invoice (including freight) | Freight | Date of Invoice | Terms | Date of Payment | Cash Discount | Net Amount Paid |
$1,800 | $50 | 8/11 | 2/10, 1/15, n/30 | 8/22 | (A) | (B) |
Use the 1/15 discount rate because the payment date is beyond the first 10 days from the invoice.
$1,800 - $50 = $1,750
$1,750 × .01 = $17.50
$1,800 - $17.50 = $1,782.50
Difficulty: 3 Hard
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
98) An invoice for office furniture for $1,210.88 with terms of 2/10, n/60 is dated October 3.
(A) What is the last date on which the cash discount may be taken?
(B) If paid within discount period, how much is the cash discount?
(C) If the discount is missed, on what day does the credit period end?
Add 10 days to the invoice date to get October 13 as the last date of the cash discount rate. Multiply the invoice amount by 2% to determine what cash discount could be allowed. 60 days past October 3 means the credit period ends on December 2.
Difficulty: 3 Hard
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
99) Jones Company received an invoice for $1,450 dated August 28, terms 2/10 EOM.
(A) What is the last date of the discount and credit periods?
(B) If paid on October 3, how much would Jones pay?
2/10 EOM means the discount ends on the tenth day of the second month following the invoice because the invoice date is after the 25th of the month.
Difficulty: 3 Hard
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
100) Mel's furniture received an invoice dated September 27 for five bedroom sets at $3,000 each. The invoice indicated a trade discount of 5/8/3. The seller of the furniture prepaid the freight of $200. Terms were 2/10 EOM. Assuming Mel pays on November 2, what amount would be paid? (Be sure to include the freight cost.)
The trade discount rate is equal to .95 times .92 times .97, or .84778. Multiply this by $3,000 times 5 bedroom sets to get $12,716.70. Payment was made on November 2nd which qualifies for the 2% cash discount ($12,716.70 × .98 = $12,462.37; $12,462.37 + $200 = $12,662.37)
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts — Single and Chain (Includes Discussion of Freight); LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-01 (2) Explain the freight terms FOB shipping point and FOB destination.; 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.; 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Analyze
Type: Static
Accessibility: Keyboard Navigation
101) 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's sent in a partial payment of $6,000. What is the amount credited as well as the balance due?
Divide $6,000 by .99 because the payment was not made in the first 10 days. $6,000/(.99) = $6,060.61. Then, take 26,000 - 6,060.61 to get 19,939.39.
Difficulty: 3 Hard
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.; 07-02 (2) Calculate outstanding balance for partial payments.
Bloom's: Analyze
Type: Static
Accessibility: Keyboard Navigation
102) Calculate the net price based on the information given below.
Item | List Price | Single Trade Discount | Net Price |
Dell Laptop | $1,200 | 30% | ? |
Multiply $1,200 by 70% = 1,200 × .7 = 840.
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
103) Calculate the list price based on the information given below.
Item | List Price | Single Trade Discount | Net Price |
Camera | ? | 40% | $699 |
Divide $699 by 60%.
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
104) Calculate the net price and amount of trade discount (use net price equivalent rate as well as single equivalent discount rate):
Item | List Price | Chain Discount | Net Price | Trade Discount |
Troy-Bilt lawn mower | $499 | 7/9 | ? | ? |
Multiply the chain rates to get .8463 and take this times the list price to get the net price. To get the Trade Discount, take List Price - Net Price.
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
105) Calculate the End of Discount Period and End of Credit Period.
Date of Invoice | Terms | End of Discount Period | End of Credit Period |
August 9th | 2/10, n/30 | ? | ? |
Add 10 days to get the end of discount period on August 19; add 30 days to get the end of credit period date to be September 8.
Difficulty: 3 Hard
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
106) Calculate the End of Discount Period and End of Credit Period.
Date of Invoice | Terms | Date Goods Received | End of Discount Period | End of Credit Period |
June 19 | 3/10, n/30 ROG | July 8 | ? | ? |
Add 10 days to the receipt of goods date of July 8 to get an end of discount period date of July 18; add 30 days to get the end of credit period date of August 7.
Difficulty: 3 Hard
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
107) Calculate the End of Discount Period and End of Credit Period.
Date of Invoice | Terms | End of Discount Period | End of Credit Period |
Nov 12 | 2/10 EOM | ? | ? |
Since the date of the invoice is before the 25th, the end of discount period will be the 10th of the next month and the end of credit period will be 20 days after that, which is the 30th day of the next month.
Difficulty: 3 Hard
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
108) Calculate the End of Discount Period and End of Credit Period.
Date of Invoice | Terms | End of Discount Period | End of Credit Period |
Nov 28 | 2/10 EOM | ? | ? |
Since the date of the invoice is after the 25th, the end of discount period will be the 10th of the second month and the end of credit period will be the 30th day of the second month.
Difficulty: 3 Hard
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
109) Brooks Dept. Store bought a stereo from a wholesaler with a $1,200 list price and a 28% trade discount. What is the trade discount amount? What is the net price of the stereo?
Net price $864
Trade discount: $1,200 × .28 = $336; Net Price: $1,200 - $336 = $864
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
110) Jones of San Diego sold Long of Baton Rouge a video system with a $6,000 list price. Sale terms were 2/10, n/30 FOB San Diego. Jones agreed to prepay the $35 freight. Assuming Long pays the invoice within the discount period, what does Long pay Jones?
Multiply the list price by 98% and add the $35 for freight.
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight); LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-01 (2) Explain the freight terms FOB shipping point and FOB destination.; 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
111) Jones Advertising Agency received a $3,000 invoice dated June 8. Terms were 2/10, 1/15, n/60. On June 22 Jones Advertising sent a $1,600 partial payment. What credit should Jones Advertising receive? What is Jones's outstanding balance? Round to the nearest cent.
Divide the partial payment by the complement of the discount rate, $1,600, divided by .99 = $1,616.16. Calculate the outstanding balance by subtracting the discount from the invoice amount; $3,000 - $1,616.16 = $1,383.84.
Difficulty: 3 Hard
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.; 07-02 (2) Calculate outstanding balance for partial payments.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
112) 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?
Multiply the complements of the chain discount rates, .93 times .91, to get .8463. Take this rate times the invoice amount of $5,000 to get $4,231.50. Multiply this by .98, the complement of the 2% discount rate to get an adjusted amount due of $4,146.87 and add the $150 freight.
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight); LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.; 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Analyze
Type: Static
Accessibility: Keyboard Navigation
113) Calculate the net price based on the information given below.
Item | List Price | Chain Discount | Net Price |
Sofa | $1250 | 10/5/5/4 | ? |
Multiply $1250 by the net cost equivalent, which is .9 × .95 × .95 × .96 = .77976. The Net Price is 974.70
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
114) Calculate the list price based on the information given below.
Item | List Price | Chain Discount | Net Price |
Grill | ? | 3/5 | 258.02 |
Find the net cost equivalent, which is .97 × .95 = .9215. Take the Net Price/Net Cost Equivalent to get the List Price of 280.
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Analyze
Type: Static
Accessibility: Keyboard Navigation
115) Which option yields the highest single equivalent discount?
Option A | Option B |
7/10/17 | 9/11/16 |
Option A Discount: .93 × .90 × .83 = .69471; 1 - .69471 = .30529; Option B Discount: .91 × .89 × .84 = .680316; 1 - .680316 = .319684
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Analyze
Type: Static
Accessibility: Keyboard Navigation
116) Calculate the Net Price Equivalent Rate in Decimals, Single Equivalent Rate in decimals, Amount of Trade Discount and Net Price based on the information given below.
Item | List Price | Chain Discount | Net Price Equivalent Rate | Single Equivalent Discount Rate | Amount of Trade Discount | Net Price |
Ring | $500 | 15/20 | (A) | (B) | (C) | (D) |
B. 32
C. $160
D. $340
Multiply .85 and .80 to get .68 as a net Equivalent rate–the complement of the net Equivalent, .32, is the single Equivalent rate–and multiply the list price by both of these rates to find the trade discount and net price, respectively.
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (3) Find list price when net price and trade discount rate are known.; 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
117) Invoice: $1,000
Terms: 3/10, n/30
Invoice date: May 5
Payment amount: $800
Date paid: May 9
A) Amount credited: ________
B) Balance outstanding: ________
Since the payment was made within the first 10 days, you will use the first discount rate of 3%. Divide 800 by .97 to get the amount credited equal to $824.74, then subtract the amount credited from the invoice amount to get $175.26 as the balance.
Difficulty: 3 Hard
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (2) Calculate outstanding balance for partial payments.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
118) Invoice: $600
Terms: 2/10, 1/20, n/30
Invoice date: May 5
Payment amount: $400
Date paid: May 17
A) Amount credited: ________
B) Balance outstanding: ________
Since the payment was made during the second discount period, use the discount rate of 1%. Divide the payment of $400 by .99 to get the amount credited equal to $404.04, and then subtract the amount credited from the invoice amount to get $195.96 as the balance.
Difficulty: 3 Hard
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (2) Calculate outstanding balance for partial payments.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
119) Gross invoice (includes freight): $500
Freight: $100
Date of invoice: 9/10
Terms: 3/10, 1/15, n/30
Date of payment: 9/22
Discount: (A)
Net Price: (B)
B. $496
Start by removing the cost of the freight to get an invoice amount of $400. Since the payment was made within the first 15 days, you will use the second discount rate of 1% to get a discount of $4 and a net payment due of $396; then add the freight of $100 back in to get a total due of $496.
Difficulty: 3 Hard
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
120) Gross invoice (includes freight): $1,000
Freight: $100
Date of invoice: 8/11
Terms: 2/10, 1/15, n/30
Date of payment: 8/30
Discount: (A)
Net Price: (B)
B. $1,000
Since the payment wasn't in either the first or second discount periods, there is in discount. Thus, the discount is $0, and the Net Price is $1,000.
Difficulty: 3 Hard
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
121) Calculate the Last Day of Discount Period and End of Credit Period based on the information given below.
Date of Invoice | Date Goods Received | Terms | Last Day of Discount Period | End of Credit Period |
Oct 7 | 2/10, n/30 | (A) | (B) | |
June 12 | 2/10, EOM | (C) | (D) | |
July 29 | 2/10, EOM | (E) | (F) | |
March 8 | July 2 | 2/10, n/30, ROG | (G) | (H) |
A. Oct. 17
B. Nov. 6
C. July 10
D. July 30
E. Sept. 10
F. Sept. 30
G. July 12
H. Aug. 1
A & B. October 7 plus 10 days is October 17, plus 30 days is November 6. C & D. Since the date of the invoice is before the 25th, the discount period ends on the 10th of the next month and the credit period ends on the 30th of the next month. E & F. Since the date of the invoice is after the 25th, the discount period ends on the 10th of the second month and the credit period ends on the 30th of the second month. G & H. Ten days after the receipt of goods date is July 12, and using the exact date chart, 30 days after the receipt of goods date is August 1.
Difficulty: 3 Hard
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Analyze
Type: Static
Accessibility: Keyboard Navigation
122) Calculate the Last Day of Discount Period and End of Credit Period based on the information given below.
Date of Invoice | Date Goods Received | Terms | Last Day of Discount Period | End of Credit Period |
September 5 | 3/10, n/30 | (A) | (B) | |
May 4 | 3/10, EOM | (C) | (D) | |
April 26 | 3/10, EOM | (E) | (F) | |
January 1 | March 3 | 3/10, n/30, ROG | (G) | (H) |
A. Sept. 15
B. Oct. 5
C. June 14
D. June 24
E. June 10
F. June 24
G. March 13
H. April 2
A & B. September 5 plus 10 days is September 15, plus 30 days is October 5. C & D. Since the date of the invoice is before the 25th, the discount period ends on the 10th of the next month and the credit period ends on the 30th of the next month. E & F. Since the date of the invoice is after the 25th, the discount period ends on the 10th of the second month and the credit period ends on the 30th of the second month. G & H. Ten days after the receipt of goods date is March 13, and using the exact date chart, 30 days after the receipt of goods date is April 2.
Difficulty: 3 Hard
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Analyze
Type: Static
Accessibility: Keyboard Navigation
123) Bill's TV buys a television from a wholesaler with a list price of $600 and a trade discount of 32%. What is the amount of the trade discount and what is the net price of the television?
Multiply the list price by 32% to get a trade discount of $192; multiply the list price by the complement of the discount rate to get the net price of $408.
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
124) A dining room set lists for $1,500 and carries a trade discount of 40%. Freight charges are $150. Calculate the final price of the dining room set.
Multiply the list price of $1,500 by 40% to get the trade discount. Subtract this amount of $600 from the list price and add in the freight of $150 to get a total final price of $1,050 [$1,500 × .4 = $600; $1,500 - $600 + $150 = $1,050].
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.; 07-01 (2) Explain the freight terms FOB shipping point and FOB destination.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
125) The Blue Manufacturer sells radios to Bob's Discount Outlet. Radios carry a trade discount of 45%. If the price of a radio is $90, what does Bob pay?
Multiply the list price of $90 by the complement of the trade discount rate to get the sales price [90 × .55 = $49.50].
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
126) 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.)
Find the difference between the list price and the purchase price to find the discount amount of $150. Divide this by the list price, $800, to get the discount rate of 18.75%.
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Analyze
Type: Static
Accessibility: Keyboard Navigation
127) 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.)
Divide the wholesale price of $6,000 by the complement of the discount rate to get the original price [$6,000 divided by .65 = $9,230.77].
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (3) Find list price when net price and trade discount rate are known.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
128) Al's Supply sold a chain saw to Mark's Lumber. The list price was $1,250. Al's Supply offered a chain discount of 6/3/1. What was the net price of the chain saw?
Multiply the complements of the chain discount rates [.94 times .97 times .99] to get the chain discount rate of .902682; multiply the list price by this chain discount rate to get the net price [$1,250 times .902682 = $1,128.35].
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
129) A manufacturer of ice skates offered a chain discount of 7/5/1. Bobby's Sport Shop ordered 30 pairs of skates that had a list price of $925. What was the amount of the trade discount?
Multiply the complements of the chain discount rates [.93 times .95 times .99] to get the chain discount rate of .874665 and subtract this rate from 1 to get a trade discount rate of .125335. Multiply the list price of $925 by this rate to get the trade discount amount of $115.93.
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.; 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
130) Buffy Rich wants to buy a new line of stereos for her shop. Manufacturer A offers trade discounts of 20/14, and Manufacturer B offers trade discounts of 25/7. Assuming both manufacturers have the same list price, which manufacturer should Buffy buy from?
Manufacturer A has the larger trade discount as its chain discount rate is .80 times .86, or .688, which when subtracted from 1 equals .312, whereas Manufacturer B's chain discount rate is .75 times .93, or .6975, which when subtracted from 1 equals only .3025.
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
131) Ed's Print Shop received an invoice dated May 10 for $2,500 with terms 3/10, 1/15, n/60. On May 22, Ed's Print Shop sent a partial payment of $2,000. What is the actual amount that should be credited, and what is Ed's Print Shop's outstanding balance?
Divide the partial payment of $2,000 by .99 since the payment was made within 15 days of the invoice. This makes the payment credited amount equal to $2020.20. When this is subtracted from the invoice amount of $2,500, the balance left is $479.80.
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
132) Jones Manufacturing sent Blue Company an invoice for equipment with a list price of $10,000. The invoice is dated July 27 with terms of 2/10, EOM. Blue Company is entitled to a 40% trade discount. If the invoice is paid on September 8, how much does Blue pay?
Since the invoice is dated after the 25th of the month, the company has until the 10th of the second month after the invoice date to receive the discount of 2%. First take the trade discount of 40% off of the invoice, $10,000 × .40 = $4,000, as the trade discount. Subtract this from the invoice to leave $6,000 due on the invoice. Since the invoice was paid before the 10th, multiply the $6,000 by the complement of the discount rate to get a balance to pay of $5,880 [6,000 × .98 = $5,880].
Difficulty: 3 Hard
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Analyze
Type: Static
Accessibility: Keyboard Navigation
133) Bloomberg's is offered the following chain discount(s); what is the lowest net price equivalent rate it will pay?
Company A | Company B |
7/9/13 | 8/6/10 |
Subtract each chain discount rate from 100% and convert each percent to a decimal. Multiply the decimals. This means you are paying $73.63 per $100 vs. $77.83 per $100, a savings on every $100 of $4.20. If you have cost purchases of $1 million per year, you would be saving $42,000 choosing Company A.
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
134) A Timex watch with a 30% trade discount costs $39.99. What is the list price?
List Price = $39.99/.70 = $57.13
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (3) Find list price when net price and trade discount rate are known.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
135) Ashley Furniture received an invoice for $4,850, dated May 19. Terms were 2/15, net 30 days. How much will Ashley pay if the invoice was electronically paid on June 2?
$4,850 × .98 = $4,753
Difficulty: 3 Hard
Topic: LU 07-02 Cash Discounts, Credit Terms, and Partial Payments
Learning Objective: 07-02 (1) List and explain typical discount periods and credit periods that a business may offer.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
136) Given a list price of $4,400 and a chain discount of 2/3, find the A. Trade Discount, and B. Net Price
B. $4,182.64
To find the net price, subtract each chain discount rate from 100% and convert each percent to a decimal. Take 1 - (.98 × .97) = .0494. Multiply this by $4,400 to get A. Take 4,400 - A to get B.
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (4) Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
137) A local Ford dealership purchased a new Ford Focus from the manufacturer that lists for $22,178. Ford Motor Company offers the dealership an 18% trade discount. Shipping costs totaled $795.00. What did the local dealership pay for the Focus?
$22,178 × .82 = $18,185.96; $18,185.96 + $795 = $18,980.96
Difficulty: 3 Hard
Topic: LU 07-01 Trade Discounts-Single and Chain (Includes Discussion of Freight)
Learning Objective: 07-01 (1) Calculate single trade discounts with formulas and complements.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
Document Information
Connected Book
Business Math Procedures 13e Test Bank with Answers
By Jeffrey Slater