A large retailer obtains merchandise under the credit terms of 1/10, net 30, but routinely takes 60 dyas to pay its bills.(Because the retailer is an important customer, suppliers allow the firsm to stretch its credit terms.) What is the retailers effective cost of trade credit?
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A large retailer obtains merchandise under the credit terms of 1/10, net 30, but routinely takes 60 dyas to pay its bills.(Because the retailer is an important customer, suppliers allow the firsm to stretch its credit terms.) What is the retailers effective cost of trade credit?
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- Cost of trade credit Firms usually offer their customers some form of trade credit. This allowance comes with certain terms of credit. These terms will affect the cost of the asset for both the buyer and the seller. Consider the following case: Blue Elk Manufacturing buys most of its raw materials from a single supplier. This supplier sells to Blue Elk on terms of 2/15, net 45. The cost per period of the trade credit extended to Blue Elk, rounded to two decimal places, is___________% Blue Elk’s trade credit has a nominal annual cost—expressed as an annual percentage rate (APR)—of_________%, assuming a 365-day year. (Note: Round all intermediate calculations to four decimal places, and your final answer to two decimal places.) If Blue Elk’s supplier shortens the discount period by five days, this will _____________(Increase or decrease pick one) the cost of the trade credit.Firms usually offer their customers some form of trade credit. This allowance comes with certain terms of credit, which affect the cost of asset of sale for the buyer as well as the seller. Consider this case: Tasty Tuna Corporation buys on terms of 1/10, net 30 from its chief supplier. If Tasty Tuna receives an invoice for $1,545.78, what would be the true price of this invoice? (Note: Round all intermediate calculations to four decimal places, and your final answer to two decimal places.) $1,912.90 $1,377.29 $1,530.32 $1,071.22 The nominal annual cost of the trade credit extended by the supplier is , assuming a 365-day year. (Note: Round all intermediate calculations to four decimal places, and your final answer to two decimal places.) Suppose Tasty Tuna does not take advantage of the discount and then chooses to pay its supplier late—so that on average, Tasty Tuna will pay its supplier on the 35th day after the sale. As a result,…Firms usually offer their customers some form of trade credit. This allowance comes with certain terms of credit, which affect the cost of asset of sale for the buyer as well as the seller. Consider this case: Free Spirit Industries Inc. buys on terms of 1/20, net 45 from its chief supplier. If Free Spirit receives an invoice for $1,254.98, what would be the true price of this invoice? (Note: Round all intermediate calculations to four decimal places, and your final answer to two decimal places.) O $1,304.55 $1,056.07 $1,242.43 O $1,118.19 The nominal annual cost of the trade credit extended by the supplier is , assuming a 365-day year. (Note: Round all intermediate calculations to four decimal places, and your final answer to two decimal places.) Suppose Free Spirit does not take advantage of the discount and then chooses to pay its supplier late-so that on average, Free Spirit will pay its by paying late. (Note: supplier on the 50th day after the sale. As a result, Free Spirit can…
- Firms usually offer their customers some form of trade credit. This allowance comes with certain terms of credit, which affect the cost of asset of sale for the buyer as well as the seller. Consider this case: Tasty Tuna Corporation buys on terms of 1/20, net 60 from its chief supplier. If Tasty Tuna receives an invoice for $1,254.98, what would be the true price of this invoice? (Note: Round all intermediate calculations to four decimal places, and your final answer to two decimal places.) $1,553.04 $1,242.43 $1,056.07 O $931.82 The nominal annual cost of the trade credit extended by the supplier is calculations to four decimal places, and your final answer to two decimal places.) , assuming a 365-day year. (Note: Round all intermediate Suppose Tasty Tuna does not take advantage of the discount and then chooses to pay its supplier late-so that on average, Tasty Tuna will pay its supplier on the 65th day after the sale. As a result, Tasty Tuna can decrease its nominal cost of trade…A customer pays on credit for $1,250 worth of merchandise, terms 4/15, n/30. If the customer pays within the discount window, how much will they remit in cash to the retailer? Assume the perpetual inventory system is used.Firms usually offer their customers some form of trade credit. This allowance comes with certain terms of credit, which affect the cost of asset of sale for the buyer as well as the seller. Consider this case: Tasty Tuna Corporation buys on terms of 4/10, net 45 from its chief supplier. A. If Tasty Tuna receives an invoice for $856.75, what would be the true price of this invoice? (Note: Round all intermediate calculations to four decimal places, and your final answer to two decimal places.) $822.48 $575.74 $699.11 $616.86 B. The nominal annual cost of the trade credit extended by the supplier is , assuming a 365-day year. (Note: Round all intermediate calculations to four decimal places, and your final answer to two decimal places.) C. Suppose Tasty Tuna does not take advantage of the discount and then chooses to pay its supplier late—so that on average, Tasty Tuna will pay its supplier on the 50th day after the sale. As a result,…
- A customer returns $690 worth of merchandise and receives a full refund. What accounts recognize this sales return, assuming the customer has not yet remitted payment to the retailer? A. accounts receivable, sales returns and allowances B. accounts receivable, cash C. sales returns and allowances, purchases D. sales discounts, cost of goods soldA customer returns $690 worth of merchandise and receives a full refund. What accounts recognize this sales return, assuming the customer has not yet remitted payment to the retailer? Group of answer choices 1.accounts receivable, sales returns and allowances 2.accounts receivable, cash 3.sales returns and allowances, purchases 4.sales discounts, cost of goods soldA customer returns $870 worth of merchandise and receives a full refund. What accounts recognize this sales return (disregarding the merchandise condition entry) if the return occurs before the customer remits payment to the retailer? A. accounts receivable, sales returns and allowances B. accounts receivable, cash C. sales returns and allowances, merchandise inventory D. accounts receivable, cost of goods sold
- 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 allowance8. Cost of trade credit Firms usually offer their customers some form of trade credit. This allowance comes with certain terms of credit, which affect the cost of asset of sale for the buyer as well as the seller. Consider this case: Green Moose Industries buys most of its raw materials from a single supplier. This supplier sells to Green Moose on terms of 4/15, net 30. The cost per period of the trade credit extended to Green Moose, rounded to two decimal places, is 4.17% Green Moose's trade credit has a nominal annual cost of decimal places, and your final answer to two decimal places.) The effective annual rate (EAR) of the supplier's trade credit is , assuming a 365-day year. (Note: Round all intermediate calculations to four If Green Moose Industries's supplier shortens its discount period to five days, this will increase the cost of the trade credit.Enter the letter for each term in the blank space beside the definition that it most closely matches. Sales discount Credit period Discount period FOB destination FOB shipping point Gross profit Merchandise inventory Purchase discount Cash discount Trade discount _______ 1.Goods a company owns and expects to sell to its customers. _______ 2.Time period that can pass before a customer’s payment is due. _______ 3.Seller’s description of a cash discount granted to buyers in return for early payment. _______ 4.Reduction below list or catalog price that is negotiated in setting the price of goods. _______ 5.Ownership of goods is transferred when the seller delivers goods to the carrier. _______ 6.Purchaser’s description of a cash discount received from a supplier of goods. _______ 7.Reduction in a receivable or payable if it is paid within the discount period. _______ 8.Difference between net sales and the cost of goods sold.…