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

Reasonable accuracy, Some the other concepts, as for example: the Matching ...

Some the other concepts, as for example: the Matching concept, the Dual Aspect concept and the Realization concept are discussed in further sections, and as they have not been take

Determining the discount rate, Determining the Discount Rate XYZ (APP)...

Determining the Discount Rate XYZ (APP) Ltd is a biotechnology company that recently listed on the Australian Securities Exchange (ASX). As such, XYZ Ltd has very limited stoc

Explain vertical analysis, Q. Explain Vertical analysis? Vertical analy...

Q. Explain Vertical analysis? Vertical analysis demonstrates the percentage that each item in a financial statement is of some significant total such as total assets or sales.

Equation, What is the accounting equation?

What is the accounting equation?

Journal, Why to and by using in journal, trading a/c, p&l a/c and ledger?

Why to and by using in journal, trading a/c, p&l a/c and ledger?

What do you mean by inventory turnover, Q. What do you mean by Inventory tu...

Q. What do you mean by Inventory turnover? Inventory turnover -- a ratio which indicates amount of inventory a company uses tosupport a given level of sales. Formula is: Invent

Calculate the wacc, The capital structure of Wild West Inc. is as follows: ...

The capital structure of Wild West Inc. is as follows: -            Debts: $5,000,000 (face value) bonds with coupon rate at 8.00% and current price at par -

Explain about prepaid insurance, Q. Explain about Prepaid insurance? Th...

Q. Explain about Prepaid insurance? The two accounts recitations to insurance are Prepaid Insurance (an asset) and Insurance Expense (an expense). Subsequent to posting this en

Explain about freight collect, Q. Explain about Freight collect? Freigh...

Q. Explain about Freight collect? Freight collect indicates the buyer should initially pay the freight bill on the arrival of the goods. To demonstrate the use of these terms s

Describe about cash role in balance sheet, Q. Describe about Cash role in b...

Q. Describe about Cash role in balance sheet? Cash includes deposits in banks obtainable for current operations at the balance sheet date plus cash on hand consisting of un-dep

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