Additional Examples138
Cost of Not Taking a Cash Discount
A cash discount gives a buyer a reduction in price if the payment is made within a specified
time period. For example, “2/10, NET/30” means that the buyer can deduct 2 percent if
payment is made within 10 days. If payment is not made within 10 days, the full amount must
be paid by the 30
th
day.
You can use the equation shown below to calculate the cost of failing to take the cash
discount. The cost is calculated as an annual interest rate charged for delaying payment.
DISC% is the discount percent if the payment is made early. TOTAL DAYS is the total number
of days until the bill must be paid. DISC DAYS is the number of days for which the discount is
available.
Example
You receive a bill with the credit terms 2/10, NET/30. What is the cost of not taking the cash
discount?
Table 13-3 Calculating the sales estimates for years six and seven
Keys Display Description
\t
0.00 Clears statistics registers.
JÆJ::::¡
1.00 Enters first year and sales for
that year.
GÆJJGJ:¡
2.00 Enters second year’s data.
DÆJD:S:¡
3.00 Continues data entry.
YÆJS:jV¡
4.00
VÆG:Vd:¡
5.00
S\W
22,000.50 Estimates sales for year six.
j\W
24,605.00 Estimates sales for year seven.
COST%
DISC% 360× 100×
100 DISC%–()TOTAL DAYS DISC DAYS–()×()
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