Question

# A computer with a manufacturer's suggested list price of \$1400 is supplied with trade discounts of...

A computer with a manufacturer's suggested list price of \$1400 is supplied with trade discounts of 40/10. The invoice is dated October 27th and paid in full on November 15th. Cash terms are 8/10, 2/20, EOM. The computer is priced with a 35% markup based on selling price. During a Thanksgiving Turkey sale the price is markdown by 25%. In December a second markdown of 10% is applied to the sale price. Determine the December sale price of the computer.

Calculate the net price after the trade discounts have been deducted.

Determine the amount submitted on November 15th to pay the invoice in full.

Determine the original selling price.

Determine the November Sale price

Determine the December Sale Price

Solution

Calculation of net price after trade discount have been deducted:

Sales price = \$1,400

Markdown of 10%, complement percent = 90%

Trade discount = 40%; complement percent = 60%

Net price = 1,400 x 60% x 90% = \$756

Amount submitted on November 15th to pay the invoice in full,

Invoice is paid in 19 days (Oct 27 – Nov 15), hence 2% discount is applied.

Amount paid = \$756 x 98% = \$740.88

Markup based on selling price – 35%

Original sale price = \$740.88 x 135% = \$1,000.19

November sale price, (markdown by 25%) = \$1,000.19 x 75% = \$750.14

December sale price = (markdown by 10%) = \$750.14 x 90% = \$675.13