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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

An electronics business purchased speakers for resale. The total of the invoice is $2,580, and it is subject to trade discounts of 15 percent, 10 percent, and 5 percent. Compute the amount the dealer will pay for the speakers.

To determine

Calculate the amount that the dealer pays for the speaker on the respective trade discounts.

Explanation

Trade discounts: The manufacturers and wholesalers offer their customer’s substantial reductions from the catalog price of their products. The reductions from the list or catalog price are called trade discounts.

Calculate the amount that the dealer pays for the speaker on 15% trade discount.

Purchase of speaker =Total invoice×Trade discount=$2,580×0.15%=$387

Payment by the Dealer=Total invoice Purchase of speaker=$2,580$387$2,193

Calculate the amount that the dealer pays for the speaker on 10% trade discount.

Purchase of speaker =Total invoice×Trade discount=$2,580×0.10%=$219

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