Suppose the selling price of a brand new upright freezer is Php 30,000

Accounting Nov 05, 2020

Suppose the selling price of a brand new upright freezer is Php 30,000. The customer buys this freezer in cash and he is given 1% discount rate by the company. The company's capital for this freezer including freight and other operating expenses is Ph25, 000. How much is the customer's simple discount? What is the net price of the freezer?

Expert Solution

Selling Price of the Freezer = Php 30,000

1% discount = 30,000 * 1% or 30,000*1/100

= Php 300

Note: Discount is always provided on a marked price or listed price or selling price. So, the cost price is irrelevant for a discount.

Customer's simple discount is Php 300

Net price of the Freezer = Listed Selling Price - Discount

= 30,000 - 300

= Php 29,700

Note: The net price of the product is after removing discounts from the list or selling price.

Profit = Net Selling price - Cost

= 29,700 - 25,000 = Php 4,700

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