2. Quantity discounts- price reductions to encourage customers to buy in large amounts. a. non- cumulative- discounts apply only to individual orders. Orders for: Less than 3 dozensPrice per dozen 3-5 dozens P 140.00 5-7 dozens P 135.00 7-9 dozens P 130.00 10 and above P 125.00
3. Quantity discounts b. cumulative- based on total volume purchased over a period of time. Order of three months% of discount on selling price Less than 100 boxes 10 % 101-150 12 % 151-200 14% 201-250 16% 251 above 20%
4. 2. Trade discounts- also known as functional discounts. (Wholesaler/Retailer) 3. Cash discounts- are reduction in price allowed the buyer to prompt payment of his bill. Example: TitaPokwang owes Librada’sJewerly Shop P 14, 750 on January 21, 2010. TitaPokwang was given terms 5/10; n/20. Where: 5- percentage reduction or discount. 10- grace period for payment with discount 20- no. of days after which bill is overdue.
5. 3. Cash discounts Example: Mrs. Kiray ordered P 75, 439.00 worth of products from PC express. She paid 25% of the total price in cash and she paid the remaining price through credit card. The date of transaction is July 11, 2011. The bank gave the following terms to Mrs. Kiray, 10/1, 5/3 and n/25. Determine amount of discount, amount payable and maturity date for each discount given.
6. 3. Cash discounts Solution: 1. 75, 439 x 0.25= 18,859.75 2. 75, 439- 18, 859.75= 56, 579.25 a. 10/1 (July 11)- 56, 579.25 x 0.10= P 5, 657.93 56, 579.25 – 5, 657.93= P 50, 921.32 b. 5/3 (July12-14)- 56, 579.25 x 0.05= P 2,828.96 56, 579.25 - 2,828.96,= P 53, 750.29 c. n/25 (July 15-Aug.8 )-P 56, 579.25
7. 4. Datings- these refer to the length of time for which sellers extend credit terms to buyers. a. season dating- selling season of the product Ex: If Jimmy Ramos ordered the goods at 7/5 season dating as early as October 1, 2011 but selling season starts at November 15, 2011. He gets the 7 % discount if he pays (5 days) on or before November 19, 2011.
8. 4. Datings b. indirect or ordinary dating- invoice date Example: If Tetchie received an invoice dated May 5 with term 8/10 indirect dating, she should pay her bill on or before May 14, 2011 (10 days), to avail of the 8 % discount.
9. 4. Datings and given c. end of the month (EOM)- next month, first day after the date of invoice. ex: Rudy Dela Cruz’ invoice date is dated July 13, 2011 7/12 EOM dating. Until what date he can get the 7 percent discount?
10. 4. Datings d. Receipt of goods dating- arrival of goods Ex: John Ong ordered goods last Sept. 2, 2010, but goods arrived at Sept. 12, 2010 and he was given 6/8 ROG dating.
11. 4. Datings e. Receipt of goods, net term dating- arrival of goods and invoice date. Ex: Cristina Gamayo’s invoice date was Dec. 27,2010, goods arrived at Jan.10, 2011, she was given 6/8 ROG, net 20 days dating.
