BUSINESS

MATH
CASH
DISCOUNTS
Emmanuel P. Sulit, MSIT(c)
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•Continue to promote the search

for truth and knowledge and be
an inspiration for others to follow
 •May we be a community of scholars 4

sharing this ambition caring for one

another
•And loyal to the truth revealed to us as
your disciples
•AMEN.
 LEARNING OBJECTIVES
• Learners are expected to:
1.identify and explain the meaning of
the different terms of sale;
2.show accuracy in solving for
discount and credit period; and
3.compute for deadline for discount
period.
 CASH DISCOUNTS
• A cash discount is a deduction allowed by
some sellers of goods or by some providers
of services in order to motivate customers to
pay within a specified time. The cash
discount is also referred to as an early
payment discount.
 ADVANTAGES OF CASH DISCOUNTS

•Motivates Customers to Pay

•Increases Cash Flow
•Provides Lower Card Processing Fees
•Attracts New Customers
•Helps Get the Sale and Spread the News
 CASH DISCOUNTS
• Unlike trade discounts, cash discounts are
recorded in the accounting records either as
sales discounts in the books of the seller or
purchases discounts in the books of the buyer
• These are deductions from the recorded net
invoice prices.
• These are also granted to buyers to encourage
prompt payment of accounts
 TERM OF SALE OR PURCHASE
2
• Can be expressed as ,
10 𝒏
𝑛 1 𝑛 • - means that the
, , 𝒆𝒐𝒎
30 15 𝑒𝑜𝑚
buyer has to pay the
• Cash discount is the
net invoice price by
sales discount
the end of the month
granted by the seller
of purchase
to the buyer
TAKE NOTE OF THE FF TERMS OF PAYMENT
𝟐 𝒏
• = , read as “two ten,n thirty”, means the buyer
𝟏𝟎 𝟑𝟎
gets 2% discount if he/she pays with 10 days from invoice
date.
• if the 10 day period has elapsed, the buyer will be given 30
days from the date of the invoice within which to pay his
account without additional charges.
• 10 day period is called “DISCOUNT PERIOD”
• 30 day period is called “CREDIT PERIOD”
 TAKE NOTE OF THE FF TERMS OF PAYMENT
𝟑 𝟐 𝒏
• = = , read as “THREE TEN, TWO FIFTEEN, N
𝟏𝟎 𝟏𝟓 𝟔𝟎
SIXTY”, means the buyer will be given 3% discount if he
pays with in 10 days from the date of invoice; or
• 2% discount if he pays within 15 days from the invoice date;
or
• If he failed to take advantage of the discounts being offered,
he has to pay within 60 days from the date of invoice
 COMPUTING FOR DISCOUNT PERIOD AND CREDIT PERIOD

• Example 1.
2 𝑛
• Date of invoice: March 2 term: ,
10 30
• A. To solve for the deadline for the discount period,
we count 10 days from March 2; we get March 12
• Date of invoice : March 2
• Discount period : 10 days
• Deadline for the discount period : March 12
 COMPUTING FOR DISCOUNT PERIOD AND CREDIT PERIOD
• Example 1.
2 𝑛
• Date of invoice: March 2 term: ,
10 30
• B. To solve for the deadline for the credit period, we
count 30 days from March 2; we get April 1
• If the buyer pays between March 2 and March 12, he
gets 2% discount.
• If he pays on March 13 or later, no discount will be
given.
• The buyer has until April 1- Deadline for the credit
period
 COMPUTING FOR DISCOUNT PERIOD AND CREDIT PERIOD

• Example 2.
3 𝑛
• Date of invoice: September 28 Term: ,
15 60
• A. Solve for the deadline for the discount period…
• Date of invoice : _____________
• Discount period : _____________
• Deadline for the discount period : _____________
 COMPUTING FOR DISCOUNT PERIOD AND CREDIT PERIOD

• Example 2.
3 𝑛
• Date of invoice: September 28 Term: ,
15 60
• B. Solve for the deadline for the credit period…
• Date of invoice : _____________
• Deadline for the discount period : _____________
• Credit Period : _____________
 COMPUTING FOR CASH DISCOUNTS
• Example 1.
• Net invoice Price : Php3,060.00
2 𝑛
• Invoice date : March 2 Term: =
15 60
a. CASH DISCOUNT = NIP x CASH DISCOUNT RATE
= 3,060 x 2%
= 61.20
b. NET AMOUNT DUE = NIP – CASH DISCOUNT
= 3,060-61.20
= 2,998.80
 COMPUTING FOR CASH DISCOUNTS
• Example 2.
• Net invoice Price : Php5,000.00
3 𝑛
• Invoice date : Sept. 28 Term: =
15 60
a. CASH DISCOUNT = NIP x CASH DISCOUNT RATE
= 5,000 x 3%
= 150
b. NET AMOUNT DUE = NIP – CASH DISCOUNT
= 5,000-150
= 4,850