Dents and Dings Auto Body buys paint with a list price of $29,000. If the supplier extends trade discounts of 30/35/20, what is the trade discount amount?
To find the trade discount amount, we need to calculate the total discount based on the given trade discount rates.
Step 1: Convert the trade discount rates to decimal form.
The trade discounts of 30/35/20 mean that the supplier is offering a 30% discount, then an additional 35% discount on the remaining amount, and finally a 20% discount on the remaining amount after the first two discounts.
The decimal form of 30% is 0.30, 35% is 0.35, and 20% is 0.20.
Step 2: Calculate the discount on the list price based on each trade discount rate.
- First, find the discount based on the 30% trade discount rate:
Discount 1 = List Price * Trade Discount Rate 1
= $29,000 * 0.30
- Next, find the discount based on the 35% trade discount rate (applied to the remaining amount):
Discount 2 = (List Price - Discount 1) * Trade Discount Rate 2
= ($29,000 - Discount 1) * 0.35
- Finally, find the discount based on the 20% trade discount rate (applied to the remaining amount after the first two discounts):
Discount 3 = (List Price - Discount 1 - Discount 2) * Trade Discount Rate 3
= ($29,000 - Discount 1 - Discount 2) * 0.20
Step 3: Calculate the total trade discount amount.
Total Trade Discount Amount = Discount 1 + Discount 2 + Discount 3
Now, let's calculate the trade discount amount.
Discount 1 = $29,000 * 0.30
Discount 1 = $8,700
Discount 2 = ($29,000 - $8,700) * 0.35
Discount 2 = $7,245
Discount 3 = ($29,000 - $8,700 - $7,245) * 0.20
Discount 3 = $2,011
Total Trade Discount Amount = $8,700 + $7,245 + $2,011
Total Trade Discount Amount = $17,956
Therefore, the trade discount amount for Dents and Dings Auto Body is $17,956.