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

Concepts of accounting, What are the implications of applying accounting co...

What are the implications of applying accounting concepts wrongly?

Birch issued 200 shares of $12 par common stock, Birch issued 200 shares of...

Birch issued 200 shares of $12 par common stock in exchange for a piece of equipment with a current market value of $3,000.Whichof the following is not part of the journal entry

What is fixed cost, Q. What is Fixed cost? Fixed cost -- a cost that do...

Q. What is Fixed cost? Fixed cost -- a cost that doesn't change as sales volume changes (in the short run.) Fixedcosts generally include such items as rent, interest, depreciat

What is accumulated depreciation, Q. What is Accumulated depreciation? ...

Q. What is Accumulated depreciation? Accumulated depreciation is a contra asset account to depreciable assets such like machinery, buildings and equipment. This account illustr

Project, What does receiving a bid do to your business records?

What does receiving a bid do to your business records?

Which brand insulating oil tester is the best, GDYJ-503 is developed accord...

GDYJ-503 is developed according to the national standard GB-86 Insulating Oil Dielectric Strength Testing Method .The tester can test three cups of oil at the similar time. LCD scr

Explain about long-term investments, Q. Explain about Long-term investments...

Q. Explain about Long-term investments? A long-term investment habitually consists of securities of another company held with the intention of (a) obtaining control of another

Preparing financial statements for a merchandising business, Preparing fina...

Preparing financial statements for a merchandising business (The statements are completed in this order.) 1.  Income Statement (contains only expenses and revenue and show

Workers compensation insurance, Workers compensation insurance Workers...

Workers compensation insurance Workers compensation insurance provides protection for employees who suffer a job-related illness or injury. Entire cost is generally paid by t

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