BayFish Company currently uses maximum trade credit by not taking discounts on its purchases.  Company is planning to borrow from its bank, using notes payable, in order to take trade discounts.  The firm wants to determine the effect of this policy change on its net income. The standard industry credit terms offered by all its suppliers are 2/15, net 40 days, and BayFish pays in 40 days.  Its net purchases are $10,000 per day, using a 365-day year.  The interest rate on the notes payable is 8% percent and the firm’s tax rate is 40 percent.  If the firm implements the plan, what is the expected change in BayFish’s net income? (Hint: Use Incremental  approach table)

On December 31, 2020, Sarasota Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Sarasota Co. agreed to accept a $337,600 zero-interest-bearing note due December 31, 2022, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 11%. Sarasota is much more creditworthy and has various lines of credit at 5%. Click here to view factor table. (a) Your answer is partially correct. Prepare the journal entry to record the transaction of December 31, 2020, for the Sarasota Co. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Dec. 31, 2020 Account Titles and Explanation Notes Receivable Service Revenue Discount on Notes Receivable Debit…

Max Corp. sold goods for $36,000 on July 17, 2020, and accepted a 12%, 90-day note. On August 1, the note was sold to a bank at a 15% discount rate. Required: a. Compute the proceeds. Assume a 360-day year. b. If the maker dishonored the note at maturity, prepare the entry for Max Corp. assuming $75 of bank protest fees. If an amount box does not require an entry, leave it blank.

MOA sells gift cards that are redeemable only at its stores.  The company's policy is to record the redemption amount as realized.  MOA sold P1,800,000 worth of gift certificates in 2019 and redeemed P1,560,000 worth of gift certificates.  The value of outstanding gift certificates as of January 1, 2019 is P520,000.  The company's gross profit margin is 40%.   What is the obligation for outstanding gift cards at the end of the fiscal year on December 31, 2019?

(Related to Checkpoint 18.2) (Evaluating trade credit discounts) If a firm buys on trade credit terms of 5/15, net 90 and decides to forgo the trade credit discount and pay on the net day, what is the annualized cost of forgoing the discount (assume a 365-day year)? The annualized cost of the trade credit terms of 5/15, net 90 is %. (Round to two decimal places.)

A company observes that the value date for an electronic transfer payment to one of Its suppliers for providing it with components, occurs 3 days earlier than if & issued a cheque for the same payment and value. So the company prefers to pay the suppler by cheque. When it realises this, the suppler offers a discount to the company to incentivise it to pay by electronic transfer instead of by cheque. How much of a discount in percentage terms should the discount offered by the supplier be? Assume that an electronic payment cost is 0.5 percent higher than the cost of issuing a cheque and that the prevalent market discount rate is 5 percent Also assume that there is float neutrality.