Average amount of accounts payable net of discounts.

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Answer 1

Question

Chapter 16, Problem 15P

a)

Summary Introduction

To determine: Average amount of accounts payable net of discounts.

b)

Summary Introduction

To discuss: Whether the firm uses any cost of trade credit in this situation.

c)

Summary Introduction

To determine: Average payables and nominal and effective costs of non-free trade credit when firm did not take any discounts but payment made on due date.

d)

Summary Introduction

To determine: Nominal and effective costs, when it could stretch payments to 40 days.

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2) What is mark-to-market accounting? a. Hint: Use an example to demonstrate the type of accounting Enron was engaging in. The following sequence of cash flows will be helpful. Assume a 10% discount rate. t = 0 t = 1 4,950.00 t = 2 9,680.00 t = 3 (25,000.00) 16,637.50 First, calculate the accounting income for each year (i.e., use historical cost accounting). Second, calculate the income using Enron's method (i.e., fair value accounting).

еВook Zane Corporation has an inventory conversion period of 90 days, an average collection period of 34 days, and a payables deferral period of 48 days. Assume 365 days in year for your calculations. a. What is the length of the cash conversion cycle? Round your answer to two decimal places. days b. If Zane's annual sales are $3,454,540 and all sales are on credit, what is the investment in accounts receivable? Do not round intermediate calculations. Round your answer to the nearest cent. $ c. How many times per year does Zane turn over its inventory? Assume that the cost of goods sold is 75% of sales. Use sales in the numerator to calculate the turnover ratio. Do not round intermediate calculations. Round your answer to two decimal places.

(16-15) Cash Discounts Suppose a firm makes purchases of $3.65 million per year under terms of 2/10, net 30, and takes discounts. a. What is the average amount of accounts payable net of discounts? (Assume the $3.65 million of purchases is net of discounts-that is, gross purchases are $3,724,489.80, discounts are $74,489.80, and net purchases are $3.65 million.) b. Is there a cost of the trade credit the firm uses? c. If the firm did not take discounts but did pay on the due date, what would be its average payables and the cost of this nonfree trade credit? d. What would be the firm's cost of not taking discounts if it could stretch its payments to 40 days?

Answer 2

Question

Chapter 16, Problem 15P

a)

Summary Introduction

To determine: Average amount of accounts payable net of discounts.

b)

Summary Introduction

To discuss: Whether the firm uses any cost of trade credit in this situation.

c)

Summary Introduction

To determine: Average payables and nominal and effective costs of non-free trade credit when firm did not take any discounts but payment made on due date.

d)

Summary Introduction

To determine: Nominal and effective costs, when it could stretch payments to 40 days.

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Answer 3

Question

Chapter 16, Problem 15P

a)

Summary Introduction

To determine: Average amount of accounts payable net of discounts.

b)

Summary Introduction

To discuss: Whether the firm uses any cost of trade credit in this situation.

c)

Summary Introduction

To determine: Average payables and nominal and effective costs of non-free trade credit when firm did not take any discounts but payment made on due date.

d)

Summary Introduction

To determine: Nominal and effective costs, when it could stretch payments to 40 days.

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Answer 4

Question

Chapter 16, Problem 15P

a)

Summary Introduction

To determine: Average amount of accounts payable net of discounts.

b)

Summary Introduction

To discuss: Whether the firm uses any cost of trade credit in this situation.

c)

Summary Introduction

To determine: Average payables and nominal and effective costs of non-free trade credit when firm did not take any discounts but payment made on due date.

d)

Summary Introduction

To determine: Nominal and effective costs, when it could stretch payments to 40 days.

Expert Solution & Answer

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Answer 5

Chapter 16, Problem 15P

a)

Summary Introduction

To determine: Average amount of accounts payable net of discounts.

b)

Summary Introduction

To discuss: Whether the firm uses any cost of trade credit in this situation.

c)

Summary Introduction

To determine: Average payables and nominal and effective costs of non-free trade credit when firm did not take any discounts but payment made on due date.

d)

Summary Introduction

To determine: Nominal and effective costs, when it could stretch payments to 40 days.

Answer 6

Chapter 16, Problem 15P

a)

Summary Introduction

To determine: Average amount of accounts payable net of discounts.

Answer 7

Chapter 16, Problem 15P

a)

Summary Introduction

To determine: Average amount of accounts payable net of discounts.

Answer 8

b)

Summary Introduction

To discuss: Whether the firm uses any cost of trade credit in this situation.

Answer 9

b)

Summary Introduction

To discuss: Whether the firm uses any cost of trade credit in this situation.

Answer 10

c)

Summary Introduction

To determine: Average payables and nominal and effective costs of non-free trade credit when firm did not take any discounts but payment made on due date.

Answer 11

c)

Summary Introduction

To determine: Average payables and nominal and effective costs of non-free trade credit when firm did not take any discounts but payment made on due date.

Answer 12

d)

Summary Introduction

To determine: Nominal and effective costs, when it could stretch payments to 40 days.

Answer 13

d)

Summary Introduction

To determine: Nominal and effective costs, when it could stretch payments to 40 days.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 16 - Define each of the following terms: Working...Ch. 16 - What are the two principal reasons for holding...Ch. 16 - Prob. 3Q Ch. 16 - Prob. 4Q Ch. 16 - Prob. 5Q Ch. 16 - Prob. 6Q Ch. 16 - Prob. 7Q Ch. 16 - Prob. 8Q Ch. 16 - What kinds of firms use commercial paper? Ch. 16 - Prob. 1P

Average amount of accounts payable net of discounts.

Solution Summary: The author calculates the average amount of accounts payable net of discounts. Person X views that there is no cost of trade credit at the current situation.

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To determine: Average amount of accounts payable net of discounts.

To discuss: Whether the firm uses any cost of trade credit in this situation.

To determine: Average payables and nominal and effective costs of non-free trade credit when firm did not take any discounts but payment made on due date.

To determine: Nominal and effective costs, when it could stretch payments to 40 days.

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Chapter 16 Solutions