Electronic Filing Electronic Filing and Calculatingand Calculating

Task 14:Task 14:InvoicesInvoices

TerminologyTerminology

Purchase orderPurchase order is a written request for a is a written request for a purchase.purchase.

VendorVendor is the company from whom the is the company from whom the merchandise is purchased.merchandise is purchased.

Sales invoiceSales invoice is the seller’s bill. is the seller’s bill. Purchase invoicePurchase invoice is a document showing is a document showing

the merchandise purchased and the cost.the merchandise purchased and the cost. ExtensionExtension is the total amount due for is the total amount due for

each item.each item. AuditedAudited is the calculations verifying is the calculations verifying

accuracy of charges.accuracy of charges.

Sales InvoicesSales Invoices

When a vender receives an order When a vender receives an order requesting merchandise, a sales requesting merchandise, a sales invoice is prepared.invoice is prepared.

The invoice includes: purchase order The invoice includes: purchase order number; date merchandise ordered; number; date merchandise ordered; shipment, freight, and payment terms; shipment, freight, and payment terms; quantity and description; and costs.quantity and description; and costs.

The sales invoice is submitted to The sales invoice is submitted to accounting department to have bill accounting department to have bill put on company account. put on company account.

Practice Sales InvoicesPractice Sales Invoices Clear calculator (CE).Clear calculator (CE). Set Decimal Selector on 2 and rounding Set Decimal Selector on 2 and rounding

on 5/4. Use Grand Total feature.on 5/4. Use Grand Total feature. Calculate the extension or amount due Calculate the extension or amount due

for each item.for each item. Quantity (24) [x] unit price ($1.96) Did Quantity (24) [x] unit price ($1.96) Did

you get $47.04?you get $47.04? Record $47.04 on invoice and answer Record $47.04 on invoice and answer

sheet.sheet. Calculate extension for all items and obtain Calculate extension for all items and obtain

the grand total.the grand total. Do problems 2 and 3 on own.Do problems 2 and 3 on own.

For No. 3, convert fraction into decimalFor No. 3, convert fraction into decimal

Freight CostsFreight Costs Freight costs may be paid by seller or by Freight costs may be paid by seller or by

buyer.buyer. FOB means Free On Board.FOB means Free On Board.

Term FOB Shipping Point means the buyer Term FOB Shipping Point means the buyer pays the freight costs.pays the freight costs.

Term FOB Destination means the seller Term FOB Destination means the seller pays the freight costs. The cost of freight is pays the freight costs. The cost of freight is listed on sales invoice and is included in listed on sales invoice and is included in amount due from buyer.amount due from buyer.

Determine who pays freight costs in Determine who pays freight costs in problems 4 and 5.problems 4 and 5.

Purchase InvoicesPurchase Invoices Buyer verifies that merchandise Buyer verifies that merchandise

received is merchandise ordered by received is merchandise ordered by comparing original purchase order comparing original purchase order with purchase invoice.with purchase invoice. Correct merchandise was sent.Correct merchandise was sent. Correct quantities were sent.Correct quantities were sent. Merchandise not damaged.Merchandise not damaged.

Submitted to buyer’s accounting Submitted to buyer’s accounting department for payment.department for payment.

Accounts payable staff audit for Accounts payable staff audit for accuracy.accuracy.

Practice Purchase Practice Purchase InvoicesInvoices

Recalculate all extensions and grand Recalculate all extensions and grand total. total. Place checkmark on answer sheet if correct.Place checkmark on answer sheet if correct. If incorrect, draw line through wrong If incorrect, draw line through wrong

amount and write correct amount on answer amount and write correct amount on answer sheet.sheet.

Approve invoice for payment.Approve invoice for payment. If no errors, write approved followed by If no errors, write approved followed by

your initials.your initials. If errors on invoice, write your initials If errors on invoice, write your initials

beside each corrected amount on invoice.beside each corrected amount on invoice. Complete problem 6 in class.Complete problem 6 in class. Complete 7 and 8 on own.Complete 7 and 8 on own.

Task 16: Task 16: DiscountsDiscounts

Trade DiscountsTrade Discounts List priceList price is suggested retail (selling) price. is suggested retail (selling) price. Trade discountTrade discount is the amount deducted from is the amount deducted from

list price given to wholesalers and retailers.list price given to wholesalers and retailers. Net amountNet amount is the list price less the trade is the list price less the trade

discount that is price paid by retailers and discount that is price paid by retailers and wholesalers.wholesalers.

Trade discounts enable businesses to modify Trade discounts enable businesses to modify prices for different categories of buyers.prices for different categories of buyers. Large purchases receive a discount.Large purchases receive a discount. Price changes between catalogs adjusts prices to Price changes between catalogs adjusts prices to

buyers.buyers.

Trade Discount Trade Discount FormulaFormula

Percentage FormulaPercentage FormulaBase (Base (list pricelist price) ) timestimes Rate Rate

((trade discount percenttrade discount percent) ) equalsequals Percentage (Percentage (trade discount trade discount

amountamount))

B x R = PB x R = P

Single Trade DiscountsSingle Trade Discounts A single trade discount is a single A single trade discount is a single

percentage, such as 20%, off the list percentage, such as 20%, off the list price.price. Clear calculator (CE).Clear calculator (CE). Set Decimal selector on 2 and rounding on 5/4Set Decimal selector on 2 and rounding on 5/4 Enter list price (1,258.00) and strike [x] key.Enter list price (1,258.00) and strike [x] key. Enter discount rate (20) and strike [%] key. Enter discount rate (20) and strike [%] key. Tap the [-] key to get net amount ($1,006.40).Tap the [-] key to get net amount ($1,006.40).

Complete problems 2 through 4 in class.Complete problems 2 through 4 in class. Complete 5 through 10 on own.Complete 5 through 10 on own.

ComplementsComplements It is possible to calculate net amount It is possible to calculate net amount

without calculating discount amount.without calculating discount amount. Use the complement or difference between Use the complement or difference between

100% and the discount rate. If discount is 100% and the discount rate. If discount is 20%, multiply list price by 80%.20%, multiply list price by 80%. Clear calculator (CE)Clear calculator (CE) Set decimal selector on 2 and rounding on 5/4.Set decimal selector on 2 and rounding on 5/4. List price (10,205.50) [x] List price (10,205.50) [x] Percent Complement (100 +22 - =) or 78 [%]Percent Complement (100 +22 - =) or 78 [%] Did you get $7,960.29?Did you get $7,960.29?

Complete problems 12 through 14 in class.Complete problems 12 through 14 in class. Complete 14-20 on own.Complete 14-20 on own.

B x R = P

Series Trade DiscountsSeries Trade Discounts

Retailers often offer a series of Retailers often offer a series of trade discounts off the list price.trade discounts off the list price.

Discounts are not added together, Discounts are not added together, but linked together in a series. but linked together in a series. The discounts are computed in a The discounts are computed in a succession.succession.

Use complements of discounts in Use complements of discounts in decimal form. (20% or .8)decimal form. (20% or .8)

Practice Series Trade Practice Series Trade DiscountsDiscounts

Clear calculator (CE).Clear calculator (CE). Set decimal selector on floating (round Set decimal selector on floating (round

final answer to two decimal places).final answer to two decimal places). Enter list price (1,258.00) and strike [x] key.Enter list price (1,258.00) and strike [x] key. Enter complement of first discount rate (.9) Enter complement of first discount rate (.9)

and strike [x] key.and strike [x] key. Enter complement of second discount rate (.9) Enter complement of second discount rate (.9)

and strike [x] key.and strike [x] key. Enter complement of third discount rate (.95) Enter complement of third discount rate (.95)

and strike [=] key. Round. Did you get and strike [=] key. Round. Did you get $968.03?$968.03?

Complete problems 22 and 23 in class.Complete problems 22 and 23 in class. Complete problems 24 and 25 on own.Complete problems 24 and 25 on own.

Practice Net Amount and Practice Net Amount and Trade DiscountTrade Discount

The memory feature will allow you to The memory feature will allow you to calculate discount amount in addition to calculate discount amount in addition to net amount.net amount. Enter list price (3,256.00) and strike [M+] key.Enter list price (3,256.00) and strike [M+] key. Strike [x] keyStrike [x] key Enter compliment rate (.9) and strike [x] key.Enter compliment rate (.9) and strike [x] key. Enter compliment rate (.9) and strike [=] key. Enter compliment rate (.9) and strike [=] key.

Did you get $2,637.36 for the net amount?Did you get $2,637.36 for the net amount? Strike [M-] key. Strike [*M] key. Did you get Strike [M-] key. Strike [*M] key. Did you get

$618.64 for the trade discount?$618.64 for the trade discount? Complete problems 27 and 28 in classComplete problems 27 and 28 in class Complete 29 and 30 on own.Complete 29 and 30 on own.

Single Discount Single Discount EquivalentsEquivalents

The complements of a series of The complements of a series of discounts are multiplied together discounts are multiplied together

to obtain a single discount to obtain a single discount equivalent (a percent equal to two equivalent (a percent equal to two or more series discount percents).or more series discount percents).

Practice Single Discount Practice Single Discount EquivalentsEquivalents

Clear calculator (CE).Clear calculator (CE). Set decimal selector on FSet decimal selector on F Multiply complements of discount rates Multiply complements of discount rates

to calculate single discount equivalent to calculate single discount equivalent (.9 x .95 x .9). Did you get .7695?(.9 x .95 x .9). Did you get .7695?

Multiply list price by single discount Multiply list price by single discount equivalent. equivalent. Use constant feature (K). Use constant feature (K). Use single discount equivalent from Use single discount equivalent from

problem 31 to calculate net amount.problem 31 to calculate net amount. Mentally round amount to 2 decimal places.Mentally round amount to 2 decimal places.

Complete 32 through 35 in class.Complete 32 through 35 in class.

Discount Equivalent Discount Equivalent TableTable

A table listing single discount equivalents A table listing single discount equivalents may be used rather than calculating the may be used rather than calculating the equivalents.equivalents.

The rates in column headings across top The rates in column headings across top of table represent first discount in series of table represent first discount in series (p. 99).(p. 99).

The rates at left of table represent The rates at left of table represent remaining discounts in series.remaining discounts in series. Discount rate: 10, 10, 10Discount rate: 10, 10, 10 Look at column 10 and look at row 10, 10Look at column 10 and look at row 10, 10 Did you get .729?Did you get .729? Problem: 6,264.00 [x] .729 = $4,566.46Problem: 6,264.00 [x] .729 = $4,566.46

Complete problems 37 through 40 in Complete problems 37 through 40 in class.class.

Cash DiscountsCash Discounts

A cash discount may be deducted A cash discount may be deducted from invoice total if prompt or early from invoice total if prompt or early payment is made.payment is made.

Invoice will state Invoice will state payment termspayment terms (condition under which cash (condition under which cash discount is offered).discount is offered).

Terms identify time period in which Terms identify time period in which discount can be deducted and final discount can be deducted and final due date of full invoice amount.due date of full invoice amount.

Payment TermsPayment Terms

2/10, n/302/10, n/30. A 2% discount if invoice paid . A 2% discount if invoice paid within 10 days of date of invoice. If invoice within 10 days of date of invoice. If invoice not paid within 10 days, full amount due not paid within 10 days, full amount due within 30 days of invoice date.within 30 days of invoice date.

3/10, 2/15, n/303/10, 2/15, n/30. A 3% discount if invoice . A 3% discount if invoice paid within 10 days of date of invoice. A 2% paid within 10 days of date of invoice. A 2% discount if invoice paid within 15 days of date discount if invoice paid within 15 days of date of invoice. Full amount due within 30 days of of invoice. Full amount due within 30 days of invoice date.invoice date.

n/30n/30. No discount offered. Full amount due . No discount offered. Full amount due within 30 days.within 30 days.

(continue next slide)(continue next slide)If seller offers both trade and cash discounts, trade discount is always deducted first.

5/10, EOM5/10, EOM. . A 5% discount if A 5% discount if

invoice paid invoice paid within 10 days within 10 days after end of after end of current month.current month.

Full amount due Full amount due at end of at end of following month.following month.

3/15, ROG3/15, ROG. . A 3% discount if A 3% discount if

invoice paid invoice paid within 15 days within 15 days after receipt of after receipt of goods, goods, regardless of regardless of invoice date.invoice date.

Practice Due DatesPractice Due Dates

Add number of days in terms to date of Add number of days in terms to date of invoice to determine invoice to determine discount due datediscount due date (last (last day a cash discount can be deducted) and day a cash discount can be deducted) and the final due datethe final due date (day full amount must be (day full amount must be paid).paid).

For invoice dated Jan. 12 & terms 1/10, n/30For invoice dated Jan. 12 & terms 1/10, n/30 Discount due date.Discount due date.

Add date of invoice (12) and length of term (10). Add date of invoice (12) and length of term (10). Answer is Jan. 22 to get 2% discount.Answer is Jan. 22 to get 2% discount.

Continue next slide

Final Due DateFinal Due Date

Subtract invoice date (12) from number Subtract invoice date (12) from number of days in month of January (31) to of days in month of January (31) to determine days left in January. Answer: determine days left in January. Answer: 19.19.

Subtract days left in January (19) from Subtract days left in January (19) from length of net term (30) to determine length of net term (30) to determine number of days into February. Answer: number of days into February. Answer: 11.11.

Full amount of invoice is due February Full amount of invoice is due February 11.11.

Complete problems 41-45. Complete problems 41-45. (Click on date/time (Click on date/time in Control Panel to figure out days.)in Control Panel to figure out days.)

Cash DiscountsCash Discounts

Cash discounts are calculated Cash discounts are calculated using percentage formula (B using percentage formula (B

x R = P).x R = P).

Practice Cash DiscountsPractice Cash Discounts

Clear calculator (CE).Clear calculator (CE). Set decimal selector on 2.Set decimal selector on 2.

Enter invoice total ($1,203.00) and strike Enter invoice total ($1,203.00) and strike [x] key.[x] key.

Enter discount rate (2) and strike [%] key.Enter discount rate (2) and strike [%] key. Did you get $24.06?Did you get $24.06? Tap [-] key to get net amount.Tap [-] key to get net amount. Did you get $1,178.94?Did you get $1,178.94?

Complete problems 47 and 48 in class.Complete problems 47 and 48 in class. Complete 49 and 50 on own.Complete 49 and 50 on own.

Task 17: InterestTask 17: Interest

TermsTerms Line of creditLine of credit is an amount approved in is an amount approved in

advance by lender which borrower can advance by lender which borrower can access at any time.access at any time.

InterestInterest is the cost of borrowing money. is the cost of borrowing money. PrincipalPrincipal is the amount borrowed. is the amount borrowed. TimeTime refers to the length of time of the refers to the length of time of the

loan.loan. Maturity dateMaturity date is the date the principal must is the date the principal must

be paid.be paid. Maturity valueMaturity value is principal plus interest is principal plus interest

amount.amount.

Simple InterestSimple Interest

Interest is calculated based on Interest is calculated based on principal when the simple interest principal when the simple interest method is used.method is used.

Formula: P x R x T = I (Formula: P x R x T = I (principalprincipal times times raterate times times timetime equals equals interestinterest)) Principal is basePrincipal is base Rate is percentRate is percent Interest is percentageInterest is percentage Time is length of loanTime is length of loan

TimeTime

Interest rates are based on time length Interest rates are based on time length of one year, so time must be expressed of one year, so time must be expressed on the basis of a year. Days and months on the basis of a year. Days and months are expressed in fraction form as part of are expressed in fraction form as part of a year.a year.

Two methods for expressing time in Two methods for expressing time in days:days: Banker’s methodBanker’s method is based on 360 days in is based on 360 days in

year.year. Exact methodExact method is based on 365 days in year. is based on 365 days in year.

The exact method is used in this text.The exact method is used in this text.

Calculating Length of Calculating Length of LoanLoan

Terms of a loan state principal, Terms of a loan state principal, interest rate, date loan was made, interest rate, date loan was made, and due date of maturity value.and due date of maturity value.

Length of loan has to be determined Length of loan has to be determined in order to calculate interest amount in order to calculate interest amount and maturity value.and maturity value.

The beginning day of loan is not The beginning day of loan is not counted, but the ending day of loan counted, but the ending day of loan is counted.is counted.

Expressing TimeExpressing Time 2-year loan2-year loan: Time is expressed in years.: Time is expressed in years.

P ($750) [x] R (7) [%] [x] T (2) [=] I ($105.00)P ($750) [x] R (7) [%] [x] T (2) [=] I ($105.00) 5-month loan5-month loan: Time is expressed as part : Time is expressed as part

of number of months in a year.of number of months in a year. P ($750) [x] R (7) [%] [x] T (5) [÷] 12 = I P ($750) [x] R (7) [%] [x] T (5) [÷] 12 = I

($21.88)($21.88) 90-day loan90-day loan: Time is expressed as part : Time is expressed as part

of number of days in a year.of number of days in a year. P ($750) [x] R (7) [%] [x] T (90) [÷] 365 [=] I P ($750) [x] R (7) [%] [x] T (90) [÷] 365 [=] I

($12.95)($12.95)

Practice Calculating Length Practice Calculating Length of Loanof Loan

The problem: A loan agreement on The problem: A loan agreement on May 29 has a due date of August 27. May 29 has a due date of August 27. What is the length of the loan?What is the length of the loan? Subtract 29 from 31 (# of days in May) = 2Subtract 29 from 31 (# of days in May) = 2 Add the days from May 29 to August 27Add the days from May 29 to August 27

MayMay = = 2 days2 days JuneJune = = 30 days30 days JulyJuly = = 31 days31 days August =August = 27 days27 days

Complete problems 1 through 3 in Complete problems 1 through 3 in class.class.

Complete 4 through 10 on own.Complete 4 through 10 on own.

Length of loan

is 90 days.

Practice Calculating Simple Practice Calculating Simple InterestInterest

and Maturity Valueand Maturity Value Clear calculator (CE).Clear calculator (CE). Set decimal selector on 6 & round to 4 or Set decimal selector on 6 & round to 4 or

6.6. After keying in principal, strike [M+].After keying in principal, strike [M+]. Use one continuous operation: Use one continuous operation:

PP [6,500.] [M+] [6,500.] [M+] [x] [x] RR [9.5] [%] [x] [9.5] [%] [x] TT [232] [÷] [365] [=] [232] [÷] [365] [=] II Did you get $392.49?Did you get $392.49? Strike [M+] and then [*M]. Answer: Strike [M+] and then [*M]. Answer:

$6,892.49$6,892.49

Remember maturity value is the date principal must be paid.

Calculate Calculate Interest and Interest and

Maturity ValueMaturity ValueComplete problems 12 Complete problems 12

through 14 in class.through 14 in class.

Complete 15 through 20 on Complete 15 through 20 on own.own.

Unknown ElementsUnknown Elements

When a company is When a company is shopping for credit, shopping for credit, one of the four one of the four elements may be elements may be unknown.unknown.

The missing element The missing element can be easily can be easily calculated by calculated by converting the basic converting the basic formula.formula. Interest = Principal x Interest = Principal x

Rate x TimeRate x Time

Calculating the PrincipalCalculating the Principal Convert the simple interest formula as Convert the simple interest formula as

follows:follows: Principal = Interest amount ÷/over Rate x Principal = Interest amount ÷/over Rate x

TimeTime Clear calculator (CE).Clear calculator (CE). Set decimal selector on 4 and rounding on Set decimal selector on 4 and rounding on

5/4.5/4. Calculate the denominator by multiplying the Calculate the denominator by multiplying the

days by rate and dividing by days in yr.days by rate and dividing by days in yr. 76 [x] 8.25 [%] [÷] 365 [=]. Did you get .0172?76 [x] 8.25 [%] [÷] 365 [=]. Did you get .0172?

Divide interest amount by denominator to get Divide interest amount by denominator to get principal.principal.

267.14 [÷] .0172 [=]. Did you get $15,531.50?267.14 [÷] .0172 [=]. Did you get $15,531.50? Complete problems 22 through 24 in class.Complete problems 22 through 24 in class.

Calculating the RateCalculating the Rate Convert the simple interest formulaConvert the simple interest formula

Rate = Interest amount/ Principal x TimeRate = Interest amount/ Principal x Time Clear calculator (CE).Clear calculator (CE). Set decimal selector on 4 and rounding on Set decimal selector on 4 and rounding on

5/4.5/4. Calculate denominator by multiplying principal by Calculate denominator by multiplying principal by

the days (time) and dividing days in a year. the days (time) and dividing days in a year. 7,814. [x] 274 [÷] 365 [=]. Did you get $5,865.85?

Divide interest amount by denominator to get the Divide interest amount by denominator to get the rate. rate.

460.40 [÷] 5,865.85 [=]. Mentally round to two decimal places. Did you get .0785 or 7.85%?

Complete 32 through 34 in class.

Calculating the TimeCalculating the Time Convert to simple interest formula.Convert to simple interest formula.

Time = Interest amount / (Principal x Rate) x 365Time = Interest amount / (Principal x Rate) x 365 Clear calculator (CE).Clear calculator (CE). Set decimal selector on 4 and rounding on 5/4.Set decimal selector on 4 and rounding on 5/4.

Calculate denominator by multiplying principal Calculate denominator by multiplying principal by rate. by rate.

32,152. [x] 8.55 [%]. Did you get $2,749.00? Did you get $2,749.00? Divide interest amount by denominator and Divide interest amount by denominator and

multiply by days of year to get time. (multiply by days of year to get time. (Mentally Mentally round to whole number.) round to whole number.)

287.05 [÷] 2,749. [x] 365 [=]. Did you get 38 days? Did you get 38 days?

Complete 42 through 44 in class.Complete 42 through 44 in class. Complete 45-50 on own.Complete 45-50 on own.

DiscountingDiscounting

When a company When a company has a poor credit has a poor credit history or does history or does not have an not have an established credit established credit history, they are history, they are considered to be considered to be a poor risk and it a poor risk and it is rated at a high is rated at a high risk level.risk level.

The lender The lender retains the retains the interest amount interest amount at time the loan is at time the loan is made, and the made, and the company receives company receives the amount the amount borrowed minus borrowed minus the interest or the interest or discount amount.discount amount.

Do not do this section.Do not do this section.

Compound Compound InterestInterest

Companies generally use Companies generally use compound interest to compound interest to

calculate interest earned on calculate interest earned on investments.investments.

Compound InterestCompound Interest Interest earned on the principal is Interest earned on the principal is

added to principal amount before added to principal amount before additional interest is calculated.additional interest is calculated.

Compound means principal and Compound means principal and interest are added together to become interest are added together to become the new amount for calculating the new amount for calculating interest.interest.

When interest is compounded, When interest is compounded, investment earns more interest than if investment earns more interest than if simple interest is calculated for the simple interest is calculated for the same time period.same time period.

Compounding Compounding Lump Sum Lump Sum DepositsDeposits

When the total amount to be When the total amount to be placed in an investment placed in an investment

account is deposited at the account is deposited at the beginning of the life of the beginning of the life of the

account.account.

Compounding Lump Sum Compounding Lump Sum DepositsDeposits

Problem: $4,500 is deposited in an investment Problem: $4,500 is deposited in an investment account at beginning of year. Account earns account at beginning of year. Account earns 8% interest per year. What amount of interest 8% interest per year. What amount of interest will be earned at end of three years?will be earned at end of three years? First year:First year: $4,500 (P) x 8% (R) x 1 (yr.) = 360.00$4,500 (P) x 8% (R) x 1 (yr.) = 360.00

$4,500.00 [+] 360.00 [=] $4,860.00$4,500.00 [+] 360.00 [=] $4,860.00 Second year:Second year: $4,860 ( new P) x 8% x 1 = 388.80$4,860 ( new P) x 8% x 1 = 388.80

$4,860.00 [+] $388.80 [=] $5,248.80$4,860.00 [+] $388.80 [=] $5,248.80 Third year:Third year: $5,248.80 (new P) x 8% x 1 = $5,248.80 (new P) x 8% x 1 =

419.90419.90

$5,248.80 [+] $ 419.90 [=] $5,668.70$5,248.80 [+] $ 419.90 [=] $5,668.70 Interest earned--$ 5,668.70 [-] $4,500.00 [=] Interest earned--$ 5,668.70 [-] $4,500.00 [=]

$1,168.70$1,168.70

Use [+] key after calculating interest to take advantage of add-on feature.

Compound vs. Simple Compound vs. Simple InterestInterest

Simple interest method:Simple interest method: $4,500.00 (P) x 8% (R) x 3 (T) = $1,080.00 ( I )$4,500.00 (P) x 8% (R) x 3 (T) = $1,080.00 ( I )

Compare:Compare: Interest earned by compound method = Interest earned by compound method =

$1,168.70$1,168.70 Interest earned by simple method =Interest earned by simple method =

$1,080.00$1,080.00 Interest increase due to compounding =Interest increase due to compounding = $ $

88.7088.70 Complete problem 72 in class.Complete problem 72 in class. Complete 73-80 on own.Complete 73-80 on own.

Compounding Compounding Periodic DepositsPeriodic Deposits

Deposits made at specified Deposits made at specified time periods, such as time periods, such as

quarterly or yearly, are quarterly or yearly, are referred to as annuity due referred to as annuity due

deposits.deposits.Do not do problems 81 through 87.

Task 18: PricingTask 18: Pricing

TermsTerms ProfitProfit is the net income. is the net income. Operating expensesOperating expenses

include utilities, include utilities, supplies, and payroll.supplies, and payroll.

MarkupMarkup amountamount is the is the amount added to the amount added to the cost of the merchandise cost of the merchandise or service and is a or service and is a percentage based on percentage based on selling price or cost of selling price or cost of the merchandise or the merchandise or service.service.

MarkupMarkup

The selling price of goods and The selling price of goods and services determines how much profit services determines how much profit a company will make.a company will make.

Price charged to customers must Price charged to customers must cover both cost of merchandise or cover both cost of merchandise or service to company and operating service to company and operating expenses. expenses.

Retailers generally use selling price Retailers generally use selling price as base for markup while as base for markup while manufacturers use cost as the base.manufacturers use cost as the base.

Markup Based on CostMarkup Based on Cost Cost is 100% or the base. Formula used:Cost is 100% or the base. Formula used:

Markup Amount (percentage):Markup Amount (percentage):MU = C x RMU = C x R Markup % (Rate):Markup % (Rate): R = MU ÷ CR = MU ÷ C Cost (Base):Cost (Base): C = MU ÷ RC = MU ÷ R

Clear calculator (CE)Clear calculator (CE) Use add-on feature Use add-on feature Set decimal selector on 2 and rounding Set decimal selector on 2 and rounding

on 5/4.on 5/4. Multiply cost by markup percent to get Multiply cost by markup percent to get

markup amt. $15.34 [x] 33 [%] Did you get markup amt. $15.34 [x] 33 [%] Did you get $5.06?$5.06?

Add cost and markup amount to get selling Add cost and markup amount to get selling price. [+] Did you get $20.40?price. [+] Did you get $20.40?

Practice Practice Calculating Calculating

Markup Based on Markup Based on CostCostComplete problems 2-4 in Complete problems 2-4 in

class.class.

Complete 5-15 on own.Complete 5-15 on own.

Markup Based on Selling Markup Based on Selling PricePrice Formula used:Formula used:

Markup Amount (Percentage):Markup Amount (Percentage):MU = SP x RMU = SP x R Markup % (Rate):Markup % (Rate): R = MU ÷ SPR = MU ÷ SP Selling Price (Base):Selling Price (Base): SP = MU ÷ RSP = MU ÷ R

Clear calculator (CE).Clear calculator (CE). Set decimal selector on 2 and rounding on Set decimal selector on 2 and rounding on

5/4.5/4. Use add-on feature.Use add-on feature.

Multiply selling price by markup percent to get Multiply selling price by markup percent to get markup amt. $265.91 [x] 42 [%] Did you get markup amt. $265.91 [x] 42 [%] Did you get $111.68?$111.68?

Subtract markup amount from selling price to Subtract markup amount from selling price to get cost. tap [-] Did you get $154.23?get cost. tap [-] Did you get $154.23?

Practice Markup Practice Markup Based on Selling Based on Selling

PricePriceComplete problems 17-18 in Complete problems 17-18 in

class.class.

Complete 19-20 on own.Complete 19-20 on own.If you were calculating just for selling price,

enter cost [x] percentage markup amount and strike [MU] key.

$154 [x] 36 [MU]. Did you get $209.44?

MarkdownMarkdown Markdown is the price reduction from Markdown is the price reduction from

the original selling price.the original selling price. The purpose is to attract customers in The purpose is to attract customers in

order to reduce inventory at end of year.order to reduce inventory at end of year. May be stated as a dollar amount or as a May be stated as a dollar amount or as a

rate of markdown from selling price.rate of markdown from selling price. Formula:Formula:

Markdown amount (Percentage)Markdown amount (Percentage) MD = MD = SP x RSP x R

Markdown % (Rate)Markdown % (Rate) R = MD ÷ R = MD ÷ SPSP

Selling Price (Base)Selling Price (Base) SP = MD ÷ SP = MD ÷ RR

Practice MarkdownPractice Markdown Clear calculator (CE).Clear calculator (CE). Set Decimal Selector on 2 and Set Decimal Selector on 2 and

rounding on 5/4.rounding on 5/4. Multiply selling price by markdown Multiply selling price by markdown

percent to get markdown amount. percent to get markdown amount. $148.79 [x] 22 [%] Did you get $36.35?$148.79 [x] 22 [%] Did you get $36.35? Tap [-] key to get reduced selling price. Did Tap [-] key to get reduced selling price. Did

you get $84.82?you get $84.82?

Complete problems 27 and 28 in class.Complete problems 27 and 28 in class. Complete 29-30 on own.Complete 29-30 on own.

Practice Markdown Practice Markdown (con’t)(con’t)

To calculate only reduced selling To calculate only reduced selling price, multiply selling price by price, multiply selling price by complement of markdown percent.complement of markdown percent.

A desk sells for $567 is marked down A desk sells for $567 is marked down 33%. What is the reduced selling 33%. What is the reduced selling price?price? 567.00 [x] 67 [%] Did you get $379.89?567.00 [x] 67 [%] Did you get $379.89?

Complete problem 32 in class.Complete problem 32 in class. Complete 33-35 on own.Complete 33-35 on own.