Cash Discounts: Other Methods

Solve Cash Discount Problems with EOM dating.

End-of-Month DatingCash discount method

End-of-Month (EOM)proximo

3/10 EOM 3/10 prox.

3% discount on invoice if payment is made by the 10th of the month that follows sale.

Objective 1

End-of-Month Dating 1 of 2

Invoice is dated January 14.Terms are 2/10 EOM

Final Discount date = _______Net Payment date = _______

18

Jan. 14 Mar 2

10

Jan. 31 Feb. 28Feb. 10

20

2

Feb. 10Mar. 2

PracticeCh 6, Section 4

Page 263# 4

*Ch 6 Test Page 271#5, 7

End-of-Month Dating 2 of 2

Invoice is dated April 26. Terms are 3/15 EOM

Final Discount date = _______Net Payment date = ________

Apr 26 Apr 30 May 31

15

June 15

20

June 30

15 5

July 5

If invoice is dated the 26th or later an extra month is added. Then count-off the 15 days…

June 15

July 5

End-of-Month Dating: SummaryEOM Dating

Final Discount Date is determined by counting from the end of the month of the invoice date. When the invoice is dated on the 26th or later, an

extra month is added.The Net Payment Due Date is 20 days after the

last discount date.

Objective 1

ProximoInvoice Amt: $356.20Invoice Date: May 17Terms: 3/15 prox.Date Invoice is paid: June 12

Amount of Discount = ________Net due date = ________Amount Due (if disc. earned) = ________

15

May 17 July 5

15

May 31 June 30June 15

20

5

June 15

July 5$356.20 x .97 =$345.51

Receipt of Goods Dating

ROGDetermine the final discount date for this problem.Invoice Date: Jan. 15Terms: 3/15 ROGGood Received on: Feb. 5

Final discount date = ________Net payment due date = ________

Feb 5

15

Feb 28 Mar 12

8 12

20

Feb 20

Feb. 20

Mar. 12

ROG Invoice Amt: $682.28 Invoice Date: June 4 Terms: 3/20 ROG Delivery Date: July 25 Date Invoice is paid: August 10

Amount of Discount = __________________ Amount Due = _______________________ Extra: Net Payment Due Date = _____________

July 25

20

July 31 Aug 14

6 14

20

Sept. 3Aug 31

17 3

$682.28 x 2% = $13.65

Sept. 3

$682.28 - $13.65 = $668.63

ROG SummaryReceipt of goods method is used when

shipping times are longer.Final discount date is set based upon when the

merchandise is received, not the invoice date.Net payment due date is 20 days after the final

discount date.

PracticeCh 6, Section 4

page 263#6

Ch 6 Testpage 271#6

Extra Dating Method

Extra Dating MethodExtends the discount period.

Used as an incentive during a slow sales season.

Used to gain a competitive sales advantage.

2/10-50 extra 2/10-50 ex. 2/10-50 x

Objective 3

Extra Dating 1 of 2

Invoice Date: Nov 22Terms: 1/10-20 x

Final Discount Date = ________Net Payment Date = ________

Nov 22

10

Nov 30 Dec 22Dec 2*

Dec 31

208 2

Jan 31

20

9 11

Jan 11

Dec. 22

Jan. 11

Extra Dating 2 of 2

Invoice Date: April 12 Terms: 3/15-50 ex.

Final Discount Date = ________ Net Payment Date = ________

Apr 12

15

Apr 30Apr 27*

May 31

50

313

June 30

20

14 6

16

June 16 July 6

June 16

July 6

PracticeCh 6, Section 4

page 263#3, 5

Ch 6 Testpage 271#8

PracticeCh 6, Section 4Determine discount and amount due

Page 263#9 – 13

Application ProblemsPages 264 – 265#18 – 20, 25, 26