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Solving Series Discount Problems

I put this together to help one of my students.  Feel free to use it.
 
 

Series discount procedure:

The list price for a winter coat is $300.00. A series discount of 20/15/5 is being offered for any orders above $9,000.00. Find (A) the discount and (B) the net price of an order of 40 coats.

Step 1: Calculate the discounted prices: 20% off is an 80%% price (0.8). 15% off is an 85% price (0.85). And 5% off is a 95% price (0.95).

Step 2: Multiply the discounts against each other.

.8 x .85 x .95 = .646 (This is the (A) Discount)

Step 3: Calculate the non-discounted price: 40 coats at $300 each, equals $12,000.000



Step 4: Calculate the discounted price: Multiply the (A) Discount by the non-discounted price:

0.646 * 12000 = a net price of $7,752.00

NOTE (n30 means NET 30, or that the entire amount becomes due if not paid in 30 days from invoice date.)

Step 5: Watch this video:http://www.youtube.com/watch?v=HclZ2M0Owko

Step 6: Use this worksheet to calculate series discounts:

http://www.college-cram.com/study/accounting/discounts-and-invoices/calculating-chain-discounts/

SECOND EXAMPLE:

3/10,2/15,n/30 means that a 3% discount is given for payment within 10 days, a 2% discount if payment is made within 15 days, and net is due within 30 days.

There is a 4% penalty after 30 days.

The order is dated Apr 7, and payment is made May 8, so there is a 4% penalty.

If the amount due is $643, then the penalty is .04*643 = $25.72 so the total payment will be $668.72.