When customers purchase goods on account, Spitz Manufacturing offers them a 2% reduction in the amount owed if they pay within 10 days. This is an example of a: Multiple Choice Sales return. Sales discount. Sales allowance. Bad debt.
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When customers purchase goods on account, Spitz Manufacturing offers them a 2% reduction in the amount owed if they pay within 10 days. This is an example of a:
-
Sales return.
-
Sales discount.
-
Sales allowance.
-
Bad debt .
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- . A buyer does not take advantage of a supplier's credit terms of 2/10, n/30 but pays in full at the 30th day; by not taking the discount the buyer loses the equivalent of how much annual interest (stated as a percentage) on the amount of the purchase. Show your calculations.It is typically beneficial for companies to take advantage of early-payment discounts allowed on purchases made on credit. To see why this is the case, determine the effective rate of interest associated with not taking advantage of the early-payment discount for each of the following situations. Assume in each case that payment is made on the 30th day of the billing cycle. Required: 1. What is the opportunity cost of not taking advantage of the discount associated with purchases made under the following terms: 6/10, n/30? 2. What is the opportunity cost of not taking advantage of the discount associated with purchases made under the following terms: 5/10, n/30? 3. To motivate managers to take early-payment discounts, what is the appropriate accounting treatment for purchase discounts? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the opportunity cost of not taking advantage of the discount associated with purchases made…Assume the credit terms offered to your firm by your suppliers are 4/15, net 30. Calculate the cost of the trade credit if your firm does not take the discount and pays on day 30
- It is typically beneficial for companies to take advantage of early-payment discounts allowed on purchases made on credit. To see why this is the case, determine the effective rate of interest associated with not taking advantage of the early-payment discount for each of the following situations. Assume in each case that payment is made on the 45th day of the billing cycle. Required: 1. What is the opportunity cost of not taking advantage of the discount associated with purchases made under the following terms: 2/25, n/45? 2. What is the opportunity cost of not taking advantage of the discount associated with purchases made under the following terms: 1/25, n/45? 3. To motivate managers to take early-payment discounts, what is the appropriate accounting treatment for purchase discounts?Assume the credit terms offered to your firm by your suppliers are 2/20, net 40. Calculate the cost of the trade credit if your firm does not take the discount and pays on day 40. (Hint: Use a 365-day year.)6. A business allows customers to pay with a credit card or with cash. If paid with cash, the customer receives a discount of 100r%, where 0Why is some trade credit called free while other credit is called costly? If a firm buys on terms of2/10, net 30, pays at the end of the 30th day, and typically shows $300,000 of accounts payableon its balance sheet, would the entire $300,000 be free credit, would it be costly credit, or wouldsome be free and some costly? Explain your answer. No calculations are necessary.The credit terms offered to a customer by a Merchandise Business are 2/10, n/30, which means that a. The customer can deduct a 2% discount if the bill is paid within 30 days of the invoice date. The customer can deduct a 2% discount if the bill is paid between the 10th and 30th day from the invoice date. c. The customer must pay the bill within 10 days. d. The customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date.The credit terms offered to a customer by a business firm are 2/10, n/30, which means that the customer must pay the bill within 10 days. the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date. the customer can deduct a 2% discount if the bill is paid between the 10th and 30th day from the invoice date. two sales returns can be made within 10 days of the invoice date and no returns thereafter.According to ASC 606, how should a referral credit be recorded in your financial statement, as a reduction of revenue or as a marketing expense? Referral credit - Company ABC is giving their existing customers a $30 credit if they refer a New Customer (after this customer makes a purchase).When goods are sold to a customer with credit terms of 2/15, n/30, customers will receive a 2% discount if they pay within 15 days. O receive a 2% discount if they pay 15% of the amount due within 30 days. O receive a 15% discount if they pay within 2 days. O receive a 15% discount if they pay within 30 days.If NetSolutions sells a customer some products on account (accounts receivable) and offers a discount for early payment of the customers accounts receivable within the credit period, the discount is called a _________________________________. Group of answer choices trade discount purchases discount sales discount sales allowanceSEE MORE QUESTIONS