COMMERCIAL DISCOUNT 45. Meaning of commercial discount. Retail merchants buy their stocks either directly from the factory or from a wholesale dealer or jobber. In the catalog which he sends to the merchant the wholesale dealer quotes the prices of the different articles. It is customary to quote on a separate sheet the discounts which may be deducted from the catalog or list price. The price of a certain stove may be $63 in the catalog but the discount sheet may state that a discount of 40% is allowed. Often a second discount of 2% or 3% is allowed for paying cash, and occasionally a third discount is allowed. Frequently a retail merchant allows a discount from the regular price of an article, and sometimes he allows a second discount for the payment of cash. EXAMPLE. The catalog or list price of a davenport is $90 but the discount sheet shows discounts of 40% and 5%. What price must the merchant pay for the davenport? SOLUTION. 40% of $90-$36, the first discount. 5% of $54-$2.70, the second discount. $54-$2.70=$51.30, the price which the merchant must pay. Instead of taking 40% of the list price from the list price, the same result might have been obtained by finding 60% of the list price. And instead of taking 5% of the 60% of the list price and subtracting it we might have taken 95% of the 60% of the list price. But 95% of 60% of the list price is the same as 57% of the list price, and 57% of $90 is $51.30. This suggests this rule for finding the cost of an article on which two or more successive discounts have been allowed : Subtract each of the discount per cents from 100%. Find the product of the resulting per cents and multiply the list price by the result. Exercise 46 1. A book dealer receives a bill amounting to $450 for books. The bill states that a discount of 2% is allowed if the bill is paid within thirty days. The next day he pays the bill. How much does he send? 2. Mary sells her chickens for which she has been asking $15, at a discount of 33%. How much does she get for them? 3. The list price of a certain book is $1.60. What will it cost a dealer who is allowed a discount of 20%? 4. At a closing out sale a discount of 25% was allowed on every article in a furniture store. What was the selling price of a chair previously marked $15? Of a dining table marked $22? Of a set of dining chairs marked $27.50? Of a bed marked $82? 5. The furniture dealer of the preceding problem had bought the furniture at discounts of 40% and 5% off the following list prices: The chair, $18; the dining table, $25; the set of dining chairs, $32; the bed, $94.50. How much did he pay for each? 6. A wholesale house allows discounts of 20% and 10%. On a bill of goods amounting to $1200, an inexperienced clerk allowed a single discount of 30%, thinking the result would be the same. How much did his mistake cost his employer? Why is a single discount of 30% greater than two successive discounts of 20% and 10%? 7. A retail merchant wishes to buy 40 yards of silk. He asks two wholesale houses to quote prices. The first quotes $2.25 a yard, less discounts of 25% and 5%. The second quotes $2.25 a yard, less discounts of 20% and 10% and an additional 1% for cash. Which is the better bargain? How much better is it? 8. A hardware dealer finds a plow marked to sell for $35. He knows this stock was marked to sell at an advance of 40%. How much had he paid for this plow? He sells it at a discount of 20% of the marked price. How much does he make on his investment? 9. On a bill of goods for $756 which is better, discounts of 25% and 10%, or a single discount of 33%? 10. On a bill for $60, which is best, discounts of 35% and 5%, or 5% and 35%, or a single discount of 39%? 46. Bills. When a bill of goods is ordered or services rendered for which payment is expected a statement of account or bill is sent to the purchaser by the one from whom they are purchased. Below is a common form of such a bill. The $1.25 is the list price of each book, the 20% is the first rate of discount, and the $25.00 is the amount the buyer must remit if he does not choose to pay within the 30 days. If he does choose to pay within 30 days he may also deduct the additional discount of 2%. Exercise 47 1. Find the amount of this bill if paid within ten days. 2. Write the bill to be sent to J. W. Comstock, Canton, Ohio, who ordered the following goods from John A. Driscoll, Columbus, Ohio. A discount of 6% is allowed if payment is made within 10 days, of 5% if made within 30 days, and of 4% if made within 60 days. Compute the amount required to pay the bill under each condition. 15 yd. ribbon at $.211, 17 yd. ribbon at $.271, 5 yd. ribbon at $.37, 6 yd. ribbon at $.53, 8 petticoats at $3.25, and thousand crewel needles at $1.50 per thousand. 3. E. E. Wilson ordered the following bill from the Loxa Tire Company: 1 Loxa tire, 34"x4", $32.50; 1 Loxa inner tube, 34"x4", $4.50; 10 gallons cylinder oil at 65¢; 1 tire cover, $2.60; 1 tire pump, $3.25; 2 Loxa Special spark plugs at 75¢. Write the bill and compute its amount allowing 5% discount for cash. 4. Mrs. Appleby sold to a customer the following produce : bu. potatoes at 90¢ a bushel, 24 cabbages at 16¢, 82 lb. of chickens at 18¢, 35 dozen eggs at 47¢, and 56 lb. of butter at 52¢. Write the bill to be sent to the customer, R. J. Brown, and compute its amount, allowing him 3% for cash. 5. Copy the following bill. Compute the cost of each item and enter the cost in the column where it is checked. Note the discount allowed at the top of the different columns, and compute the amount of the bill which was paid at the end of 20 days. |