Gabriela Lawler
Gabriela Lawler
Lori McGee Gudmundson
Finance 1380
09/20/2013
Summary Practice Test: Chapter 7
Complete the following (pp. 173, 176)
Item List Price Single Trade Discount Net Price
1. Apple iPod $350 5%
2. Palm Pilot 10% $190
$ 350 x .95 = $332.50 P / R 190 / .90 = $211.11
Calculate the net price and trade discount (use net price equivalent rate and single equivalent discount rate) for the following (pg. 176-178)
Item List price Chain Discount Net Price Trade discount
3. Sony HD $899 5/4
Flat screen TV.
95 x .96 = .912 x 899 = $819.89
$899 - $819.69 = $79.11
4. From the following, what is the last date for each discount period and credit period? (p. 180)
Date of Invoice Terms End of discount period End of credit period
a. Nov 4 2/10, n/30
b. Oct 3, 2009 3/10, n/30 ROG
Goods received
March 10,2010
Discount Nov 14
End of Period Nov 4 308 + 30 = 338 Dec 4
3/10 N/30 ROG
March 10 - March 20 discount Period
March 10 69 + 30 = 99 April 9 due date.
5. Best Buy buys and IPod from a wholesaler with a $300 list price and a 5% trade discount. What is the trade discount amount? What is the net price of the IPod? (p.173)
.95 x $300 = $285
.05 x $300 = $15
$300 - $15 = $285
6. Jordan’s of Boston sold Lee Company of New York computer equipment with a $7,000 list price. Sale terms were 4/10, n/30 FOB Boston. Jordan’s agreed to prepay the $400 freight. Lee pays the invoice within the discount period. What does Lee pay Jordan’s? (pg 173 -180)
$7,000
4/10 Net 30
$7,000 x .96 = $6,720 + 400 = $7,120
7. Julie Ring wants to buy a new line of Tonka trucks for her shop. Manufacturer A offers a 14/8 chain discount. Manufactures B offers a 15/7 chain discount. Both manufactures have the same list price. Which manufacturer should Julie buy from? (p177)
a. .86 x .92 = .7912
1 - .7912 = .2088 or 20.9%
b. .85 x .93 = .7905
1 - .7905 = .2095 or 20.95%
8. received a $8,000 invoice dated April 10. Terms were 2/10, 1/15, n/60. On April 14, sent an $1,900 partial payment. What credit should receive? What is ’s outstanding balance? Round to the nearest cent. (pg. 187)
B = P / R $1,900 / .98 = $1,938.78
$ 1,900 payment
$ 38.78 interest
$8,000 – $1,938.78 = $6,061.22
9. Logan company received from and invoice dated September 29. List price on the invoice was $8,000 (freight not included). Logan receives a 8/7 chain discount. Freight charges are Logan’s responsibility but agreed to prepay the $300 freight. Logan pays the invoice on November 7. What does Logan company pay ? (pp. 177, 185)
.92 x .93 = 0.8556
$8,000 x 0.8556 = $6,844.80
$6,844.80 + 300 = 7,144.80
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