A large retailer obtains merchandise under the credit terms of 1/15, net 45, but routinely takes 60 days to pay its bills. Use a 365-day year. a). What is the retailer's effective cost of trade credit?

A large retailer obtains merchandise under the credit terms of 1/15, net 45, but routinely takes 60 days to pay its bills. Use a 365-day year. a). What is the retailer's effective cost of trade credit?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter21: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 4P: A large retailer obtains merchandise under the credit terms of 1/15, net 45, but routinely takes 60...

See similar textbooks

Related questions

Q: Sales amount to $564,000, variable costs are 53% of sales, and fixed cost is $120,000. What is the…

A: Concept of Sales RevenueSales revenue is the total amount of money a company earns from selling its…

Q: What was the total credit sales during April on these financial accounting question?

A: Step 1: Define Credit SalesCredit sales refer to the total amount of sales made on credit during a…

Q: Anderson Manufacturing estimates direct labor costs and manufacturing overhead costs for the…

A: Explanation of Direct Labor Costs: Direct labor costs represent the wages and benefits paid to…

Q: Financial Accounting

A: Step 1: Define Variable Overhead VarianceVariable Overhead Variance measures the difference between…

Q: Answer?

A: Here's how to calculate the profit margin and find the correct answer:Calculate Net Sales:Net Sales…

Q: The net income reported

A: Concept of Net IncomeNet income represents a company's total earnings after deducting all expenses,…

Q: What are the structural deficit and the cyclical deficit?

A: 1. Calculate the change in tax revenue due to the output gap:The economy is operating $300 billion…

Q: Subject: financial accounting

A: Explanation of Net Profit Margin (NPM): Net Profit Margin is a financial ratio that measures how…

Q: MCQ

A: The question requires the determination of the ROE.Return on equity (ROE) is a financial metric that…

Q: please solve this General accounting question

A: Step 1: DefinitionDays' Sales in Accounts Receivable measures the average number of days it takes…

Q: 5 POINTS

A: To calculate the deficit, we need to compare the government's revenue to its spending.Revenue: $1.8…

Q: answer plz

A: Step 1: Definition of Overhead ApplicationOverhead application is the process of allocating indirect…

Q: Daya corporation reported the following financial data

A: Explanation of Net Income: Net income represents the total profit a company has earned after…

Q: help me to solve this questions general accounting

A: Step 1: Definition of Intangible AssetsIntangible assets are non-physical assets that provide…

Q: What is the maximum inventory of croissants held in a given ordering cycle of this financial…

A: Step 1: Define Maximum Inventory in Ordering CycleMaximum Inventory is the highest level of…

Q: Find out

A: Concept of Cost-Volume-Profit (CVP) AnalysisCost-Volume-Profit (CVP) Analysis is a financial tool…

Q: choose best answer

A: Step 1: Definition of Preference StockA preference stock is one form of security issued to the…

Q: General accounting question please give me solution

A: Step 1: Definition of LiabilitiesLiabilities represent the financial obligations of a company,…

Q: Please help me this question solution

A: Step 1: Definition of Cost of Goods Manufactured (COGM)Cost of Goods Manufactured (COGM) represents…

Q: At the beginning of the year, ACYFAR1 purchased 21% of the outstanding ordinary shares ofACYFAR2…

A: 1. Determine the purchase price allocation:ACYFAR1 acquired 21% of ACYFAR2 for Php 8,713,514. The…

Q: General accounting

A: Step 1:A. The degree of operating leverage is calculated by dividing the percentage change in EBIT…

Q: Don't Use Ai

A: Net Income = Sales * Profit MarginNet Income = 24,300,000*8.20%Net Income = $1,992,600 Return on…

Q: Sahyog pharmaceutical reported the following financial data

A: 1. Calculate 2022 Revenue:2022 Revenue = 2021 Revenue * (1 + Sales Growth Rate)2022 Revenue =…

Q: Pinehurst industries has the following account balance... Please answer the financial accounting…

A: Step 1: Define Intangible AssetsIntangible assets are non-physical assets that provide economic…

Q: answer plz financial accounting

A: Step 1: Definition of Total Manufacturing CostsTotal manufacturing costs refer to the total expenses…

Q: 4 PTS

A: Concept of SalesSales represent the total revenue generated from selling goods or services before…

Q: Hy expert give me solution

A: Step 1: Define Supplies and ToolsSupplies and tools are considered assets in a company's balance…

Q: ?!

A: The question requires the determination of the net income. Net income (NI), or net earnings, is a…

Q: MCQ

A: The question requires the determination of the net capital gain. A net capital gain is the profit…

Q: Solve this

A: Calculate the Deficit (or Surplus) for Each YearThe deficit (when expenses exceed revenue) or…

Q: ANSWER

A: Approach to solving the question:Freeform Detailed explanation: Explanation of Variable Costing and…

Q: Ans

A: Concept of Variable OverheadVariable overhead refers to the indirect production costs that change…

Q: general accounting

A: Step 1: Definition of Payout RatioThe dividend payout ratio is the fraction of earnings that is paid…

Q: Sanju has $12,500 of net long-term capital gain and $7,800 of net short-term capital loss. This nets…

A: Step-by-Step Solution to Determine Net Capital Gain or Loss Understanding the Problem StatementSanju…

Q: Give me Answer

A: Standard Cost per Pound=5.80 Standard Material per Unit=2.35 pounds which means 1 unit requires 2.35…

Q: Financial Accounting

A: Step 1: Definition of Equivalent Taxable YieldThe equivalent taxable yield is the yield that a…

Q: what is Archware's' net income? general accountim

A: Step 1: Definition of Net Profit MarginNet profit margin is a financial ratio that measures how much…

Q: Bramwell Industries produces joint products C and D from Material X in a single operation. 500…

A: Explanation of Joint Products: Joint products are multiple products that are produced simultaneously…

Q: Anti-Pandemic Pharma Co. Ltd. reports the following information in its income statement: Sales =…

A: To compute the Cash Flow from Assets (CFA) and Net Change in Working Capital (NWC), let's break it…

Q: During the year

A: Step 1: Salary Expenses can be calculated by adding Salaries paid and Ending Salaries payable and…

Q: Solve this financial accounting problem

A: Step 1: Define Cost of Merchandise PurchasedThe Cost of Merchandise Purchased is the total cost…

Q: Solve this financial accounting

A: Step 1: Calculation of Total Capital GainCapital Gain per Share = Ending Price - Purchase…

Q: Crane Company sponsors a defined benefit pension plan. The corporation's actuary provides the…

Q: Fulton Designs is making 15 customized birthday invitations. The production costs include $30 in…

A: Explanation of Materials Cost: Materials cost represents the direct materials used in creating the…

Q: ???

A: We are given the following information:Baseline Sales: $6 millionBaseline Profit: $0.30…

Q: None

A: Step 1: Definition of Degree of Operating Leverage (DOL)Degree of Operating Leverage (DOL) measures…

Q: none

A: Step 1:First calculate the number of units manufactured: Number of units manufactured = Units sold +…

Q: Financial Accounting

A: Step 1: Define Net Working Capital (NWC)Net Working Capital (NWC) measures a company's short-term…

Q: What amount is debited or credited to retained earnings of this financial accounting question?

A: Step 1: Calculation of Net IncomeNet Income = Revenues - ExpensesNet Income = $500,000 - $320,000Net…

Q: What is the unit product cost

A: Detailed explanation: Unit Product Cost using Variable Costing Method Includes the following cost…

Question

choose best answer financial accounting

A large retailer obtains merchandise under
the credit terms of 1/15, net 45, but routinely
takes 60 days to pay its bills. Use a 365-day
year.
a). What is the retailer's effective cost of trade
credit?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

If a retailer purchased inventory in the amount of $750, terms 2/10, n/60, returned $30 of the inventory for a full refund, and received an allowance for $95, how much would the discount be if the retailer remitted payment within the discount window?
If a customer purchased merchandise in the amount of $340, terms 3/10, n/30, returned $70 of the inventory for a full refund, and received an allowance for $65, how much discount would be applied if the customer remitted payment within the discount window?
Please provide the answer
I don't need ai answer accounting questions
None
Assume the following information: merchandise is sold on account to customer for P120,000, FOB Shipping Point, 2/10, n/30. The seller paid transportation cost of P6,000. What is the amount of remittance due within the discount period?
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?
if merchandise is sold on account to a customer for 1,000 terms fob shipping point 1/10, n/30, and the seller prepays $50 in freight, the amount of the discount for early payment would be?
If merchandise is sold on account to a customer for 1000 terms FOB shipping point, 1/10, n/30 and the seller prepays $50 in transportation costs, the amount of the discount for early payment would be:
A company purchases merchandise with a catalog price of $24,500. The company receives a 35% trade discount from the seller. The seller also offers credit terms of 2/10, n/30. Assuming no returns were made and that payment was made within the discount period, what is the net cost of the merchandise?
Merchandise invoiced at $8,900 is sold on terms 1/10, n/30. If the buyer pays within the discount period, what amount will be reported on the income statement as net sales?
A retailer purchases some merchandise with an invoice price of $19,700 and terms of sale of 5/15, n/45. What is the net amount due (in $) on the order if a partial payment of $10,800 is made on the 15th day? (Round your answer to the nearest cent.)