Practical Business Math Procedures Chapter 7 Challenge Problems and Summary Practice Set

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Challenge Problems
7-49
I.Given
a)Honda Insight Original Price $17,995.00
b)Honda Insight Dealer Price $16,495.00
c)Terms: 1/15 n/30
II.Unknown
a.How much is the rebate?
b.What percent is the rebate?
c.What is the amount of the discount if the dealer pays within 15 days? d.What is the dealer’s final price?
e.What is the dealer’s total savings?
III.Equation
a.Rebate = Original Price – Dealer Price
b.% Rebate= (Rebate / Original Price) x 100%
IV.Solving and Solution
a.Rebate = Original Price – Dealer Price
= $17995.00 – $16495.00
= $1,500.00 rebate

b.% Rebate= (Rebate / Original Price) x 100%
= ($1500.00 / $174995.00) x 100%
= 8.34% rebate

c.15day discount= Dealer Price x Discount
= $16495.00 x 1%
= $164.95 15day discount

d.Final Price= Dealer Price – Discount
= $16495.00 – [$16495.00 x (1%)]
= $16495.00 – $164.95
= $16330.05 final dealer price

e.Total Savings= Rebate + 15day discount
= ($1500.00 rebate) + ($164.95 15day discount)
= $1,664.95 total savings

7-50
V.Given
d)Invoice dated March 28 received March 30
e)50 TV x $125.00
f)10/4/2 chain discount
g)FOB shipping point = $70
h)2/10 EOM (April)
i)3 defective items (50 – 3 = 47)
j)April 8  $150.00 partial payment
k)Payment of full on May 6
VI.Unknown
a.Final Payment on May 6 w/o taxes
VII.Equation
a.(50 TV units less 3 defective) x $125.00 each = $5,875.00

b.Chain discount = 10/4/2
= (1.00 – 0.10) x (1.00 – 0.04) x (1.00 – 0.02)
= 0.90 x 0.96 x 0.98
= 0.847
= 1.00 - 0.847 = 0.153 ~ 15.33%
= $5875 x 15.33% discount
= $900.52 Chain discount

c.FOB Shipping Point = additional $70 to payment
d.
e.$150 partial payment to 2/10 EOM
= 100% - 2% = .98
$150 = $153.06 credited to amount
.98

VIII.Solving
 Total Amount= $ 5875.00
Less: Chain Discount= $ 900.52
Add: FOB Shipping Point= $ 70.00
Less: Partial Payment Credit= $ 153.06
Payment Due on May 26= $ 4891.42

IX.Solution
The final Payment of Century Television on May 6 will amount to four thousand eight hundred ninety one dollars and forty two cents ($4,891.42) assuming no taxes are due.
Summary Practice Set

List PriceSingle Trade DiscountNet Price
1.Apple Ipod$350.005%$332.5
2.Palm Pilot$211.1210190

List PriceChain DiscountNet PriceTrade Discount
3.Sony HD flat screen TV%899.005/4819.8979.11

4.What is the end of discount period and end of credit period? Date of InvoiceTermsEnd of Discount PeriodEnd of Credit Period a.November 42/10, n/30November 4December 4
b.Octotober 3, 20093/10, n/30 ROG (03/10)March 20, 2010April 9, 2010 c.May 22/10 EOMMay 12May 31
d.November 282/10 EOMDecember 8December 31

5.Best Buy buys an Ipod - $300 List Price and 5% trade discount a. Trade discount amount= list price x trade discount
= $300.00 x 5%
= $15.00
b.Net Price= list price – trade discount amount
= $300.00 - $15.00
= $285.00

6.Lee Company bought computer equipment - $7000.00, terms 4/10, n/30, FOB shipping point Discounted price = List Price x (1-Discount)
= $7000 x (100%-4%)
= $7000 x 96%
= $6720.00 Discounted price
Final Payment= Discounted Price + FOB Shipping Point
= $6720.00 + $400.00
= $7120.00 total payment

7.Which manufacturer should Julie buy from?
Manufacturer A chain discount=14/8
= (100% - 14%) x (100% - 8%)
= 86% x 92%
= 79.12% net discount rate
Manufacturer B chain discount=15/7
= (100% - 15%) x (100% - 7%)
= 85% x 93%
= 79.05% net discount rate
Julie should buy from Manufacturer A since they give a higher discount

8.Office.com received $8000.00 invoice with 2/10, 1/15, n/60 term. Partial payment of $1900.00 on May 14. a.What credit should Office.com receive?
Payment on May 14 = $1900.00
Complement of discount rate = 100% - 1% (may14)
= .99
Credited amount= $1900.00
.99
= 1919.19 is the amount...
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