Chapter 10

Sales and Marketing

10-1 Cash Sales and Sales on Account Proving Cash

Most cash registers are really computer terminals with a display screen and a scanner that is connected to a computer.

The scanner reads bar codes that tells what department, how many, what size and what product is purchased.

Computers/Cash registers also calculate sales tax, totals the sale and updates inventory records

Proving Cash – counting the money in the drawer and checking this amount against the cash register readings to see if the right amount is there.

Why do we have to prove cash?

Every cash register needs to have start up cash…this is referred to as your cash fund or start up cash.

If you have more cash than you should, your are cash over, if you have less cash than you should then you are cash short.

EX: Gretchen works as a cashier for Tops. When she started work, she put $100 in her cash register drawers at the end of her work period, her register readings should total cash received $4,672.98, and total cash paid out, $68.42. When she counted the cash in her drawer, she found $4,702.56. Was she over or short? She is short by $2.00 Do A & B on page 419

Sales Invoice and Credit Memo

When a seller sells goods to a buyer on credit, the seller gives the customer a sales invoice.

A sales invoice lists the good sold and delivered to the buyer. The buyer calls this form a purchase invoice…invoice is the same thing as a bill.

Credit Memo – when you buy something on credit and you need to return it, then the company gives you a credit memo…this amount can be deducted from your bill.

Do C & D on page 421

Customer Account Balance Most people use cash or credit to

purchase items, however, businesses generally let people purchase items on credit or on account.

At the end of the month bills are then paid for all purchases and credits….you need to keep track of all bills and credits.

Look at page 131 in workbook… and do it together..

Open Textbooks to page 422-423 and

get scrap paper out.

Working with your table partner, answer the following questions:

Page 422 (E-F)E. $784.83F. $13,028

Please sit where your name is and get out the following:Whiteboard, marker, ragNotebook w/ paperCalculatorPen/Pencil

Warm Up..(show ALL work on white boards and circle answer)At the start of the day, March 6, Marsha put $100 change fund in her cash register. The cash register readings at the and of the day showed total cash received, $3,283.86, and total cash paid out, $45.31. The cash in the register at the end of the day was $3,338.37. Was the cash drawer over or short and by how much?

$.18 short

Warm Up..(show ALL work on white boards and circle answer)Annette had $140 in changed in her cash register at the start of work on March 19. At the end of her work period, there was $2,961.19 in the cash register. The register totals showed that she received $2,983.27 and paid out $159.76 during the period. How much was the cash over or short?

$2.32 short

Warm Up..(show ALL work on white boards and circle answer)Risco Products sold these items to Sponson’s Flooring:60 cases of floor tile @ $24.54 a case12 gallons of adhesive @ $31.89 a gallon12 tile cutters @ $48.23 eachWhat was the total of the sales invoice?

$2,433.84

Using your whiteboards and your table partner, list any incentives a company could give so they get their bill paid sooner.

If the bookstore received an invoice dated 3/15 and the terms were net 10, what date should the bill be paid by?

10-2 Cash and Trade Discounts Most business to business

transactions begin with a purchase order…this is a form from the buyer that states all the details of the purchase and confirms money has been designated for this purchase.(it is an order for a purchase)

Most businesses get 30 days to pay a bill..this is called the credit period.

10-2 Cash and Trade Discounts Cash discounts – a discount given to

people to encourage them to pay their invoices early…usually expressed as 1/30…this means a person will get a 1% discount if their bill is paid within 30 days

You may also see 5/10, n/30..this means you will get a 5% discount if paid within the next 10 days or the whole thing is due within 30 days.

I was given an invoice dated 5/11 from I was given an invoice dated 5/11 from KDH Imprint for 40 monogrammed KDH Imprint for 40 monogrammed sweatshirts they sold me at $25.50 sweatshirts they sold me at $25.50 each.each. The terms on the invoice were The terms on the invoice were 10/10, n/30.10/10, n/30.

1.1. What is the What is the lastlast date my bill is due? date my bill is due?• June 10June 10thth

2.2. What is the What is the lastlast date my bill is due that date my bill is due that I can still get a discount?I can still get a discount?

• May 21May 21stst

3.3. If I paid my invoice on 5/16, what If I paid my invoice on 5/16, what should I owe?should I owe?

• 40 * $25.50=$1,02040 * $25.50=$1,020• $1,020 * .1 = $102$1,020 * .1 = $102• $1,020 – $102 = $918.00$1,020 – $102 = $918.00

10-2 Cash and Trade Discounts Trade Discounts – these are

reductions from the list price to their business customers. Different discounts may apply to different customers and different products. Sometimes it is because they order a lot of products, sometimes it is to get rid of a product.

3.3. If I have an invoice for $560.00 and I If I have an invoice for $560.00 and I get a trade discount of 25% plus get a trade discount of 25% plus 8.75% tax, what is the total amount 8.75% tax, what is the total amount I owe on the invoice?I owe on the invoice?

• Find discount…560 * .25 = $140Find discount…560 * .25 = $140• $560 – 140 = $420$560 – 140 = $420• Apply tax.. $420 * .0875 = $36.75Apply tax.. $420 * .0875 = $36.75• Add taxes and pay bill $420 + $36.75 = Add taxes and pay bill $420 + $36.75 =

$456.75$456.75

Homework…

Page 132 in workbook…this will be

graded tomorrow.

Rate of Discounts Rate of Discounts – this is similar to asking

what the % decrease is….take the difference between the list price and the discount price and then divide it by the list price.

Ex: An invoice totaling $5,200 was paid within the discount period. The amount paid was $5,070. What was the rate of cash discount…

5,200-5,070 =130 130/5,200 = .025 or 2.5%

Ex: A swimsuit with a list price of $75 was sold to a retailer for $41.25. What was the amount and rate of trade discount?

$75 - $41.25 = $33.75 $33.75 / $75 = .45 or 45%

Let’s look at your homework

Workbook page 132

Get out notebook and write the following vocabulary words down…

Cash discount – a discount given as an incentive to pay the invoice early.

Trade discount – a discount given to certain customers because they do a lot of business together.

10-3 Series Discounts Some wholesalers may give a trade

discount that has two or more discounts, called a discount series or a series of discounts.

EX: The trade discount may be 20%, 15%, 10%. The means that three discounts are applied one after the other.

If I have an invoice for $640.00 and I get a series discount of 15%, 10%, what is the final amount that I owe on this invoice?

Here are the steps to calculate: $640 * .15 = $96.00 $640 – $96 = $544 $544 * .10 = $54.40 $544 – $54.40 = $489.60 (Is there an easier way to calculate?) 640 * .85, then * .90 = $489.60 Why don’t they just give a 25%

discount? Because then they would be giving a

total of $160 which = $480.00

Ex. The list price of a display case is $2,100, less 25%, 10%, and 5%. Find the invoice price and the amount of trade discount.

1. $2,100 * 25% = 5252. 2,100 – 525 = $1,575.003. $1,575 * 10% = 157.504. $1,575 - $157.50=$1,417.505. $1,417.50 * 5% = $70.8756. $1,417.50 – 70.875 = 1,346.625…

1,346.63(invoice price)7. $2,100 – 1,346.63 = 753.37…trade

discount amount.

Homework… Pages 133-134 in workbook…only #1-

4

What is….??? An Invoice? A Credit memo? Proving Cash? List 5 things on an invoice What does keeping a customer

account mean? What is a cash discount? What is a trade discount? What is a series discount?

10-4 Markup and Markdowns One way businesses price items is to

use markup pricing. An amount is added to the cost of the

goods to cover all other expenses plus a profit.

This amount is known as markup. The selling price is the price at which

the item is actually sold.

Markup and Markdowns Lisa owns a luggage store and has to buy

carry-on luggage for a line she sells for $90. She knows that her markup must be 40% of the selling price to cover expenses and get the net income she wants. What is the highest price she can afford to pay for each piece of luggage?

There are 2 methods:

1. Subtract the markup rate from 100% to find the cost as a percent and multiply the selling price by the cost as a percent to find the cost..

100% - 40% = 60% 60% x $90 = $54 2. Multiply the selling price by the markup

rate to find the markup., then subtract the mark up from the selling price to find the cost.

40% x $90 = $36 $90-$36 = $54

A wholesaler want to sell a drill to retailers for $45 and earn a markup of 20% on the selling price. What is the most the wholesaler can pay for a drill and get the desired markup? 100% -20% = 80% 45 *.80 = $36.00

Marion, a jeweler, wants to set a price of $600 for a bracelet. The markup he wants is 60% of the selling price. What is the most he can pay for the bracelet? 100% - 60% = 40% $600 * .40 = $240

Markup and Markdowns Markdown – is generally what we have

considered a discount. It is a percentage of a marked price. To move an overstocked item, a discount of

15% is given on a backpack with a marked price of $70. Find the amount of the discount and the selling price. 70 * .15 = 10.50 $70 – 10.50 = $59.50

Markup and Markdown review questions:

1. As the buyer for Rezden Electronics, you are buying a travel alarm clock for a line that sells at $11.98. What is the most you can pay for the clock and maintain a markup of 45% of the selling price? 100 - .45 = .55 .55 * 11.98 = $6.59

Your store sells two-way radio sets in two price lines.

An inexpensive set sells for $59.50. A better radio set with more features sells for $115. What is the highest cost price you can pay for each of these lines and make a markup of 48% of the selling price?

$59.50 = $30.94 $115 = $59.80

Markdowns: A man’s suit with a marked price

of $270 is being offered at a 20% discount. What is the selling price? $216.00

At the end of the selling season a flat of flowers marked at $12.50 is discounted 35%. What is the selling price of the flat? $8.12

Review of % increase/decrease and markup/markdown…

Castle Learning Assignment…due tomorrow, Wed. May 8th.

**** You must try to do all incorrect questions and read the help they give you!!

10-5 Marketing Surveys Population – all the people in an

organization or those surveyed. Sample population – part of the total

population that were surveyed. Demographic data - includes data such

as age, sex, education, marital status, occupation and income.

Respondents – people who answer surveys Valid – when all questions are properly

answered and collected.

Page 445-446 #A -#D A. 62% B. 58,400; 73% C. 16.8% D. 9.2%

Page 447 5. 133; 62.1% 6. 714 7. 40.6%

Homework/Partner work… Page page 137 #12-14 only and

page 138. Also due tomorrow – Castle

Learning Markup/down, Increase/Decrease

10-6 Sales Forecasts Many companies try to estimate their

future sales…predictions or projections. One way companies forecast sales is by

analyzing sales trends/history from the past.

Using trends or forecasts assumes that all the factors that influence sales remain the same.

10-6 Sales Forecasts EX: Sales of morning treat cereal

increased an average of 20% a year over the past 6 years. This year’s sales of Morning treat were $6,500,000. Based on this trend, what are the forecasted sales for next year?

20% * 6,500,000 = 1,300,000 1,300,000 + 6,500,000 = 7,800,000

Page 449 in textbook… A & B. A. $7,050,000 B. 338,040

Forecasting Methods… Market tests – involves the actual sale

of a new product in a specific geographic city.

Surveys – questions to consumers regarding a companies products

EX: The Useful Products Company developed a clip-on carrying case that holds two pairs of eyeglasses. In one test market, Useful Products sold 7,200 cases at $3.80 a case. Useful Products now wants to sell the cases nationally in all 60 of its markets, all of which are similar in size. Based on sales in the test market, what total unit and dollar sales are forecasted for the first year?

60 * 7,200 = 432,000 unit sales forecast $3.80 * 432,000 = $1,641,600 dollar

sales forecast

Page 450 in textbook… C & D C. $402,875; $16,517,875 D. $3,394,800. Pages 139 homework

10-7 Market Share Market Share – tells what percentage of

the total market’s sales on seller has. Page 453…example 1

A. 58% B. 26,460 #5-13 on page 454 and Page 140

homework