Cash Discounts ~ Ordinary Dating Methods

Calculating Net Cost after discounts: Cash Discounts: offered by seller

to encourage prompt payment

Net = List – Trade – Cash

Cost Price Discount Discount

The Ordinary Dating Method Notation: 2/10, n/30 or 2/10, net 30 Means: 2% discount if paid in 10

days, the total is due in 30 days. AFTER 10 days, 2% discount does

not apply! AFTER 30 days, payment is

overdue and late charges may be added!

To determine if a cash discount is earned:Check the date on the invoice and

consider the # of days the discount is in play.

You must know how many days are in each month. (See p 250)

Examples: An invoice dated June 8 offers terms

of 3/15, net 30. Find (A) the last date on which the 3% discount can be taken and (B) the net payment date.

An invoice is received for $2830.15, dated March 21, and offers 3/15, n/30. If the invoice is paid on April 4 and the shipping & insurance charges are 124.96, find the amount due.

Postdating & Cash Discounts Invoices may be postdated to offer

more time for the discount.

i.e. 07/25 AS OF 08/01 Means: invoice was dated July 25,

but the discount and net payment date are calculated as of Aug 1.

An invoice for Waterford Crystal is dates Aug 24 AS OF Sept 1 with terms of 1/10, n/30. Find (A) the last date on which the cash discount may be taken and (B) the net payment date.

An invoice is dated April 14 and offers terms of 3/10, 2/30, 1/40, n/60. Find (A) the 3 final dates of each discount and (B) the net payment date.

IF no “Net payment period is given… Then the net payment is due 20

days after the last discount date.