MAT112 BUSINESS MATHEMATICS

CHAPTER 7 (TRADE AND CASH DISCOUNT)

1. A retailer received an invoice dated 7th June 2011 with trade discounts of 15% and 10%
and cash discount terms 5/10, 2/20, n/30. The net price after the trade discounts
including transportation cost of RM200 was RM1,730.
i) Explain the cash discount terms of 5/10, 2/20, n/30
Get 5% cash discount if payment made within 10 days
Get 2% cash discount if payment made within 20 days
Get 0% cash discount if payment made within 30 days

ii) Find the list price [RM2000]

1730-200=L(1-0.15)(1-0.1)
1530=L(0.765)
L=RM2000

iii) Find the total payment if the payment was made on 27th June 2011.
[RM1699.40]
(Q4(a) Oct 2012)
TP=1730(1-0.02)
=RM1695.40

2. A retailer received an invoice of RM4500 dated 6 July 2010 with trade discount offer of
15% and 10% and cash discount terms of 5/10, 3/15, n/30.
i) Find the single discount equivalent. [23.5%]
1-(1-0.15)(1-0.1)
=1-0.765
=0.235 × 100
=23.5%

ii) Find the amount of payment if the retailer decides to make a payment on 11 July
2010. [RM3270.38]
(Q4(a) March 2012)
4500(1-0.15)(1-0.1)(1-0.05)
=RM3270.38

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 3. A retailer ordered 20 sets of dining table and received an invoice dated 25 March 2009
for RM15,000 including the transportation cost with cash discount terms of 7/15, n/30
and trade discount 8% and 4%. The transportation cost was RM1,584.
i) Find the last date to received the cash discount.
25/3-31-3=6 days (15-6=9)
1/4-9/4=9 days
9th April 2009
ii) Calculate the net price for 20 sets of dining table.
(Q4(a) April 2011)
(15000-1584)(1-0.08)(1-0.04)
=13416(0.92)(0.96)
=RM11849.01

4. On 23 July 2009, a grocer bought certain items for his shop amounting to RM2,000. He
was given trade discounts of 10%,5% and cash discount terms of 5/10,3/15,n/30. Find:
i) the single discount equivalent to the given trade discounts. (14.5%)
1-(1-0.1)(1-0.0.5)
=1-0.855
=0.145 × 100
=14.5%
ii) the amount paid if a payment was made on 6 August 2009. (14 days, 3% cash
discount, RM1658.70)
(Oct 2010)
TP=2000(1-0.1)(1-0.05)(1-0.03)
=RM1658.70

5. A wholesaler gives trade discounts 20%, 10% and 5% to his regular customers. He sent
an invoice dated 8 September 2009 with cash terms 6/20, 4/30 and n/60 for the product
listed at RM 16,450. The payment was made 20 days after the date of invoice. Calculate
the:
i) single discount rate equivalent to the given trade discounts, (31.6%)
1-(1-0.2)(1-0.1)(1-0.05)
=1-0.684
=0.316 × 100
=31.6%
ii) amount of trade discounts received, (RM5198.20)
16450(0.316)
=RM5198.20

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 iii) total payment made, (RM10576.69)
16450(1-0.316)(1-0.0.6)
=RM10576.69
iv) last date to get the 6% cash discount. (RM 28th September 2009)
(Q4(a) apr2010)
8/9 + 20 days =28 September 2009

6. CT Computer ordered 20 units of laptop computers and received an invoice dated 25

January 2009 for RM50,000 (excluding transportation cost) with cash discount terms of
8/15, n/30 and trade discount 10% and 6%. The transportation cost was RM1584.
i) Find the last date to receive the cash discount.(9th February 2009)
25/1-31/1=6 days (15-6=9)
1/2-9/2=9 days
9th February 2009
ii) Calculate the net price.(RM42300)
NP=50000(1-0.1)(1-0.06)
=RM42300
iii) Determine the total payment if CT Computer pays the invoice on 7 February
2009.(RM40500)
(Q4(a) oct2009)
TP=42300(1-0.08)+1584
=RM40500

7. On 13th August 2007, a retailer received an invoice and the list price of goods bought
was as follows:
Items RM
Cabinet 720
Clerical Chair 850
Executive chair 950
Executive table 1150

The delivery cost was RM100. The trade discounts given were 10%, 5% and the cash
discount terms were 5/10, 2/20, n/30.

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 i) Find the net price after trade discount and the amount of discount. (RM3137.85,
RM532.15)
(720+850+950+1150)(1-0.1)(1-0.05)
=3670(0.9)(0.95)
=RM3137.85

D=3670-3137.85
=RM532.15
ii) What are the final dates for each cash discount rates? (5%: 23rd August 2007, 2%:
2nd September 2007)
5% 10 days
13/8-23/8=10 days
23rd August 2007

2% 20days
13/8-31/8=18 days (20-18=2)
1/9-2/9=2 days
2nd September 2007
iii) Find the amount paid to settle the invoice if payment is made on 30th August 2007.
(RM3175.09)
(Q4(a) apr2009)
TP=3137.85(1-0.02)+100
=RM3175.09

8. The net price of an item after a trade discount of 12% and 8% was RM3000. The invoice
was dated 23rd July 2007 with cash discount terms of 4/10, n/30.
i) Find the list price of the item.(RM3705.53)
3000=L(1-0.12)(1-0.08)
L=RM3705.53
ii) Calculate the single trade discount rate that is equivalent to the trade discount
given.(19.04%)
(Q4(a) oct2008)
1-(1-0.12)(1-0.08)
=1-0.8096
=0.1904 × 100
=19.04%

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 9. On 14 June 2006, GG Truck Company received an invoice for the following items.
LIST PRICE PER UNIT
ITEM QUANTITY
(RM)
Tyre 8 110
Battery 12 160
Sport ream 15 180

The transportation cost is RM400. The company received trade discounts of 10% and 15%
and cash discount terms of 4/10, n/30. Calculate:
i) the single discount rate equivalent to the given trade discounts (23.5%)
1-(1-0.1)(1-0.15)
=1-0.765
=0.235× 100
=23.5%
ii) the last date to get the 4% cash discount (24th June 2006)
10 days
14/6-24/6=10 days
24th June 2006
iii) the amount of trade discount received (RM1292.50)
110 × 8=RM880
160 × 12=RM1920
180 × 15=RM2700

(880+1920+2700)(1-0.1)(1-0.15)
=5500(0.765)
=RM4207.50

5500-4207.50
=RM1292.50
iv) the amount paid if payment was made on 20 June 2006.(RM4439.20)
(Q4(a) oct2007)
TP=4207.50(1-0.04)+400
=RM4439.20

10. The net price of an item after a trade discount of 10% and 5% was RM2,000. The
invoice was dated 23 June 2005 with cash terms of 3/10, n/30.
i) Find the list price of the item. (RM2339.18)
2000=L(1-0.1)(1-0.05)
L=RM2339.18

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 ii) Calculate the last day to receive the 3% cash discount. (3rd July 2005)
(Q4(a) apr2007)
3% 10 days
23/6-30/6=7 days (10-7=3)
1/7-3/7=3 days
3rd July 2005

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