Dating Terms
USING YOUR
UNDERSTANDING OF
DISCOUNTS
2/10, N/30
Dating Terminology
 Invoice: lists the quantities and costs of the
items purchased.
 Discount Incentive: To encourage prompt
payment, the supplier may offer a cash
discount if the bill is paid within a certain
number of days.
 Many suppliers use ordinary dating.
 The
exact terms of the discount are stated on the
invoice
 When the discount period and the credit period
start on the date of the invoice
2/10, net 30
2/10, n/30
What does this all mean?
 2% cash discount if paid within 10 days
of date of invoice.
 Net price must be paid within 30 days of
date of invoice
Review of Formulas from Discounts
 Cash Discounts = Net Price *
(100%-Discount Rate)
 100% - discount rate = paid rate
Example
 Terms are 3/10, n/30. Net price is
$640.
 What is the discount rate in this
problem?
 3%
 What is the paid percent of 3%?
 100-3 = 97%
 What is the cash price?
 640 * .97 = 620.80
2/10, n/30 ROG
 ROG: Receipt of Goods
 2/10, n/30 ROG means that the discount
period starts with the receipt of the
goods
Example
 The net price of goods from Fashion
Footwear, to the Mall Shoe Store is
$4217.86. If the invoice is paid on
December 11, what is the cash price?
 On an invoice you may find the following
information.
 Invoice
Date: 12/05/09
 Received Date: 12/05/09
 Terms 8/10, n/30
Answer to Example
 What is the discount rate?
 8%
 When is the last day to take advantage of the
discount?
 December
15
 Do they make the discount period?
 Yes
 What is the cash price?
 4217.86 * .92 = 3880.43
EOM Dating Terms
 EOM: End of Month
 Discount period begins AFTER the end
of the month
 6/15 EOM
A
6% cash discount if an invoice is paid within
15 days AFTER the end of the month in which
the invoice is issued.
Example
 Bob’s Drugstore received an invoice
from General Wholesalers. What is the
last day that Bob’s can take advantage of
the 4% discount? What is the cash
price?
 Date: July 12 Terms: 4/10 EOM
 Total on Invoice: $727.05
 Invoice was paid on August 5th
Answer to Example
 We stated the discount rate to be 4%.
 When is the last day to take advantage of
the discount?
 August
10th
 Do they make the discount period?
 Yes
 What is the cash price?
 727.05 * .96 = 697.97
Putting it all together
Date: October 10, 2009
McKee Foods Corporation Invoice Number: 6515280
Corner Junction
Terms: 4/10, n/30
Qty
Description
Sold By:
Independent Distributor
Becca
Net Cost
24
24
12
36
24
12
24
Chewy Choc Chip
Chewy Oats & Honey
Star Crunch
Oatmeal Pies
Cherry Pie
Choc Chop Cookie
Cosmic Brownie
4.44
4.44
2.22
6.66
8.04
3.90
4.44
Total Store Cost $
 What is the discount percent?
 When is the last day they are able
advantage of the discount?
34.14
to take
 What is the net price, when paid on October 15, 2009?
Answer to the Example
 What is the discount percent?
 4%
 When is the last day they are able to
take advantage of the discount?
 October 20, 2009
 What is the net price, when paid on October
15, 2009?
 34.14 * .96 = $32.77
Putting it all together
Date: August 10, 2009
Corner Junction
Qty
5
1
2
7
Augusta Sportswear
Invoice Number:
1171980
Terms: 5/10, EOM
Sold By:
Description
Net Cost
Micro poly pant lined
77.50
Micro poly pant lined
16.70
Micro poly pant lined
31.00
Micro poly full zip jacket 118.65
Total Store Cost $
 What is the discount percent?
 When is the last day they are able
advantage of the discount?
243.85
to take
 What is the net price, when paid on September 9, 2009?
Answer to the Example
 What is the discount percent?
 5%
 When is the last day they are able to
take advantage of the discount?
 September 10, 2009
 What is the net price, when paid on
September 9, 2009?
 243.85 * .95 = $231.66