Valix Finacc vol 1 Problem 7-14

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 7-14

Company A

List price                                                                                                                      500,000

Less: First trade discount (20% x 500,000)                                                                      100,000

                                                                                                                                    400,000

         Second trade discount (10% x 400,000)                                                               40,000

                                                                                                                                   360,000

         Third trade discount (10% x 360,000)                                                                    36,000

Invoice price                                                                                                              324,000

Less: Cash discount (2% x 324,000)                                                                                   6,480

Payment within the discount period                                                                           317,520

Company B                                                       

List price                                                                                                                      500,000

Less: Trade discount (35% x 500,000)                                                                            175,000

Invoice price                                                                                                               325,000

Less: Cash discount (2% x 325,000)                                                                                   6,500

Payment within the discount period                                                                           318,500