Describe about chain discount, Accounting Basics

Assignment Help:

Q. Describe about chain discount?

Occasionally the list price of a product is subject to several trade discounts this series of discounts is a chain discount. Chain discounts survive for instance when a wholesaler receives two trade discounts for services performed such as packaging and distributing. When in excess of one discount is given the buyer applies every discount to the declining balance successively. If a product has a list price of USD 100 as well as is subject to trade discounts of 20 per cent and 10 per cent the gross selling price (invoice price) would be USD 100 - 0.2(USD 100) = USD 80; USD 80 - 0.1(USD 80) = USD 72 computed as follows

List price                                       $100

Less20%                                       - 20
                                                     $ 80
Less 10%                                         ¦
                                                         8
Gross selling price (invoice price) $ 72

You could get the same results by multiplying the list price by the complements of the trade discounts allowed. The complement of 20 percent is 80 percent for the reason that 20 percent + 80 percent = 100 percent. The complement of 10 percent is 90 percent for the reason that 10 percent + 90 percent = 100 percent. therefore the gross selling price is USD 100 X 0.8 X 0.9 = USD 72.


Related Discussions:- Describe about chain discount

accounts receivable for small busines, How vital does Accounts receivable ...

How vital does Accounts receivable for small business and why?        Ans) Accounts Receivables help small businesses by giving short-term liquidity. Also continued sales on cre

Explain cash basis of accounting, Q. Explain cash basis of accounting? ...

Q. Explain cash basis of accounting? Professionals such as lawyers and physicians and some relatively small businesses may account for their revenues and expenses on a cash bas

What is investment banking, Investment banking is a is an instrument which ...

Investment banking is a is an instrument which is used by the financial organization to take a improved investment decision like issuing IPO stocks bond etc.

Receivable trouble debt, Obtain the relevant authoritative literature on ac...

Obtain the relevant authoritative literature on accounting for accounts receivable using the FASB''s Codification Research System at the FASB website. What is the specific citation

Inventory valuation, The Kauai Surf Company sells high-end surfboards to to...

The Kauai Surf Company sells high-end surfboards to tourists.  The inventory is purchased from a manufacturer in Honolulu.

In accounting, 1. what is accounting ? 2. what should we/i do to know accou...

1. what is accounting ? 2. what should we/i do to know accounting 3. what are the basics of accounting? 4 is accounting is hard ?

Explain the schedule of accounts payable, Schedule of Accounts Payable  ...

Schedule of Accounts Payable  Lists the balances of accounts payable ledger, and Accounts Payable controlling account demonstrates the total amount owed to ALL creditors. Th

Consolidation, Perth Ltd acquired 80% of the share capital of Summer Ltd on...

Perth Ltd acquired 80% of the share capital of Summer Ltd on 1 July 2011. The following equity balances appeared in the records of Summer Ltd at the date of acquisition: Share capi

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd