Discounts (Part II)

Continuing on the last article, the second discount type is known as Cash discount. This is very tricky as a problem solving but it is just as important as the others. Cash discount focuses on the time interval of the payment. And it’s common for you to see terms like 10/15 or n/30. It basically means that a discount of 10% may be deducted from the total amount of payment if it is done in 15 days and if 15 days has passed, the full payment will be given at the end of 30 days starting from the date of invoice.

their is actually no formula to remember in this discount but the crucial part is having a calendar beside you and the terms of the payment. here is a list of days per month:

  January      31

  February    it depends

  March        31

  April          30

  May           31

  June           30

  July            31

  August       31

  September  30

  October      31

  November  30

  December  31

knowing how to compute for discount is also needed.

to remember the dates more easily you can visit this website http://www.eudesign.com/mnems/dayspcm.htm 

paying early is a good practice and it also gives us a special reward of discount!  

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sample problem: An invoice in the amount of P5,500 was dated on September 24 and grants the following terms 10/5, 5/10, and n/30. The date of payment was on October 23.

SOLUTION

since the date of payment was included in the problem, you just need to find if the buyer acquired a discount on the terms given. And starting from September 25, the days that has elapsed is 29 days so no discount will be given. the answer is still P5,500 

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checked by Prof. Cris Paner