Question

An invoice dated July 23rd for $2,500 is subject to a chain trade discount of 40/15. Credit terms are 5/10, 2/30, N/45. The invoice is paid in full on August 15th. The item is priced with a 60% markup based on selling price. The item is later sold during a sale where the price was markdown by 20%. Determine the sale price.

Answer 1

Answer: Sale Price  = 80% of Selling price = $2,500

Explanation:

First we'll compute the net price after the trade discounts have been deducted :

i.e. Net price after the trade discounts have been deducted =2500 x 60% x 85% = $1,275.

Now, using the net price after the trade discounts have been deducted  we'll compute Amount submitted in payment of the invoice:

i.e. Amount submitted in payment of the invoice = 1,275 x 98% = $1,250.

Selling price  =$\frac{Amount submitted in payment of the invoice}{40}$= $\frac{1,250}{40}$ = $3,125.

Sale Price  = 80% of Selling price = $2,500