15.7 Cash Discounts-­‐ EOM Dating Objective: To understand how to compute the cash price when the discount is based on end-­‐ of -­‐month dating. Terms: 6/10 EOM 6: Cash discount rate 6% 10: within 10 days after the end of the month to get discount EOM: End of the month To pay full amount, it is due 20 days after the last day for the discount. Ex: Invoice Date: Oct 2 Terms: 2/10 EOM a. Find the last day a discount can be taken. Invoice Month the month after invoice month October Nov 10 2nd number in Terms b. Find the last day to pay the invoice. The last day the discount can be taken November 10 + 20 November 30 Always add 20 Ex: Invoice Date: August 11 Terms: 3/10 EOM Net Price: $1,280.95 Date Paid: Sept 7 Find the cash price. Invoice Month the month after invoice month August Sept 10 2nd number in Terms Can I take a discount? Yes because Date Paid is before Sept 10 Cash Price = 1280.95 ∗ (100− 3)% = $1242.52 1st number in Terms Ex: Invoice Date: April 2 Terms: 2/10 EOM Net Price: $2,489.74 Date Paid: May 17 Find the cash price. Invoice Month the month after invoice month April May 10 2nd number in Terms Can I take a discount? No because Date Paid is after May 10 Cash Price = $2,489.74 Hw # 7 Pg. 506 # 1-­‐10