Gabriela Lawler
Lori McGee Gudmundson
Finance 1380
09/20/2013
Summary Practice Test: Chapter 7
Complete the following (pp. 173, 176)
Item
List Price
1. Apple iPod
Single Trade Discount
$350
Net Price
5%
2. Palm Pilot
10%
$ 350 x .95 = $332.50
P/R
$190
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
3. Sony HD
Flat screen TV.
95 x .96 = .912
Chain Discount
$899
x 899 =
Net Price
Trade discount
5/4
$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
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
End of discount period
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.
End of credit period
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. Office.com received a $8,000 invoice dated April 10. Terms were 2/10, 1/15, n/60.
On April 14, Office.com sent an $1,900 partial payment. What credit should Office.com
receive? What is Office.com’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 furniture.com 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 Furniture.com agreed to prepay
the $300 freight. Logan pays the invoice on November 7. What does Logan company pay
Furniture.com? (pp. 177, 185)
.92 x .93 = 0.8556
$8,000 x 0.8556 = $6,844.80
$6,844.80 + 300 = 7,144.80