Using Post Dating When Calculating Cash Discounts - AS OF Dating For Cash Discounts Explained
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2 سال پیش
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In this video we discuss
In this video we discuss using post dating, or AS OF dating for cash discounts in business. We go through an example of how to find the cash discount date and net due date
Transcript/notes
Cash discounts are often written as 3/10, n/30 on an invoice. The first number is a percent discount, the second number is a date range, so in this case, 10 days, and net 30 is again a date range, so in this case 30 days.
To determine whether cash discounts are earned, and the actual due date of the invoice, we need to calculate the due date for the cash discount and the due date of the invoice.
And, sometimes an invoice is postdated to give the purchaser more time to take the cash discount. This is often labeled “AS OF”.
Let’s go through an example of determining these dates with a postdated invoice.
As a quick example, let’s say that an invoice for $420, states 2/10, n/30 and the invoice is dated 10/6, AS OF 10/10.
So, if the invoice is paid within 10 days from the AS OF date, there is a 2% cash discount. I have done the calculations for the discount on the screen, which results in $411.16.
For the date, for the discount, 10 days from the AS OF date. We do not include the actual date of the postdate, the 10th. Here is a calendar counting the days from the postdate, or AS OF date, which is the 20th. To compute this date, we just add 10 to the AS OF date, so 10 plus 10, which equals 20, so the 20th.
Now for the due date of 30 days from the AS OF date. To calculate this, we subtract the AS OF date from the number of days in the month, then add the number of days in the next month needed to get to 30.
Using our example of 10/10. There are 31 days in October, so we have 31 minus 10, which equals 21. To get to 30, we need to add 9 to 21, so, 9 days in the next month of November, and the due date for 30 days is from 10/10 is 11/9, November 9th.
Chapters/Timestamps
0:00 Cash discount terms explained
0:27 Post dating (AS OF) for cash discounts explained
0:38 Example problem for post dating for cash discounts
Transcript/notes
Cash discounts are often written as 3/10, n/30 on an invoice. The first number is a percent discount, the second number is a date range, so in this case, 10 days, and net 30 is again a date range, so in this case 30 days.
To determine whether cash discounts are earned, and the actual due date of the invoice, we need to calculate the due date for the cash discount and the due date of the invoice.
And, sometimes an invoice is postdated to give the purchaser more time to take the cash discount. This is often labeled “AS OF”.
Let’s go through an example of determining these dates with a postdated invoice.
As a quick example, let’s say that an invoice for $420, states 2/10, n/30 and the invoice is dated 10/6, AS OF 10/10.
So, if the invoice is paid within 10 days from the AS OF date, there is a 2% cash discount. I have done the calculations for the discount on the screen, which results in $411.16.
For the date, for the discount, 10 days from the AS OF date. We do not include the actual date of the postdate, the 10th. Here is a calendar counting the days from the postdate, or AS OF date, which is the 20th. To compute this date, we just add 10 to the AS OF date, so 10 plus 10, which equals 20, so the 20th.
Now for the due date of 30 days from the AS OF date. To calculate this, we subtract the AS OF date from the number of days in the month, then add the number of days in the next month needed to get to 30.
Using our example of 10/10. There are 31 days in October, so we have 31 minus 10, which equals 21. To get to 30, we need to add 9 to 21, so, 9 days in the next month of November, and the due date for 30 days is from 10/10 is 11/9, November 9th.
Chapters/Timestamps
0:00 Cash discount terms explained
0:27 Post dating (AS OF) for cash discounts explained
0:38 Example problem for post dating for cash discounts
2 سال پیش
در تاریخ 1401/08/10 منتشر شده
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