A large retailer obtains merchandise under the credit terms of 2/15, net 35, but routinely takes 60 days to pay its bills. (Because the retailer is an important customer, suppliers allow the firm to stretch its credit terms.) What is the retailer's effective cost of trade credit? Assume a 365-day year. Do not round intermediate calculations. Round your answer to two decimal places.

Q: Kumi Ltd permits its customers to pay with a credit card or to receive a percentage discount ? for…

A: Given:

Q: Nottingham Financial purchases computer parts from its suppliers 2/10, net 60.  However, Nottingham…

A: Effective Cost of not taking Trade Credit = (1 + Discount/(100 -discount)) ^(365/( days of credit…

Q: What are the nominal and effective costs of trade credit under the credit terms of 2/20, net 35?…

A: Credit terms specify the rate of discount a business can obtain when full payment is made within the…

Q: a.  How long is cash typically tied up in inventories? (Show computations) b.   What would be the…

A: a)-The Inventory conversion period In the question it takes 80 days to collect the sales receivable…

Q: McDowell Industries sells on terms of 4/10, net 40. Total sales for the year are $825,500. Thirty…

A: Discounted customers=15×30%=4.5 days

Q: average investment in accounts receivable?

A: Average investment in accounts receivable = Accounts receivable average collection period * Annual…

Q: ou prefer to extend credit on the assumption that you will be paid in full within 42 days of the…

A: Solution:- As given in the question, Firm X has an average inventory of $640,000 and sales of…

Q: Calculate the nominal annual cost of trade credit under each of the following terms. Assume a…

A: Annual nominal cost of trade credit = Discount %/(100-Discount %) x (360/Allowed payment days –…

Q: To increase its sales, a company decides to increase its credit terms from 15 to 30 days. What…

A: Receivable turnover=Total credit saleAverage receivables  Days sales uncollected=Average…

Q: Route Canal Shipping Company has the following schedule for aging of accounts receivable: Age of…

A: Accounts receivable aging is a periodic report that categorizes a company's accounts receivable…

Q: Sanders' Prime Time Lighting Co. has credit sales of $2,232,000 and accounts receivable of $409,200.…

A: The objective of the question is to calculate the average collection period for Sanders' Prime Time…

Q: Calculate the nominal annual cost of trade credit under each of the following terms. Assume a…

A: Given:

Q: Assume the credit terms offered to your firm by your suppliers are 2/15, net 30 . Calculate the cost…

A: Discount % = 2% Credit Period = 30 daysDiscount Period = 15 daysNumber of day in a year = 365

Q: Tobin Fisheries currently sells to its customers on terms of 2/11, net 31. Its average collection…

A: “Since you have posted multiple questions, we will provide the solution only to the first question…

Q: 3) A large retailer obtains merchandise under the credit terms of 3/10, net 30, but routinely takes…

A: Discount Rate = 3% Discount Period = 10 days Credit Period = 50 days

Q: McEwan Industries sells on terms of 3/10, net 40. Total sales for the year are $1,912,500; 40% of…

A: Days Sales Outstanding (DSO) is a term used to describe the average time it takes for a business to…

Q: supplier hands you an invoice for $47,000 with the terms 4/20, net 180. a. ) What is the effective…

A: Equivalent Annual Cost -Businesses can utilize Equivalent Annual Cost (EAC) as a crucial tool to…

Q: Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 5/10,…

A: Trade credit is a type of credit that is extended by a business to its customers. It allows…

Q: PLEASE SHOW ALL WORK For terms of 8/10, n/60 determine the annual rate you, in effect, pay the…

A: Credit terms = 8/10 , n/60 means if payment is made within 10 days then supplier will offer 8%…

Q: A Mikey's sells $119,500 of its accounts receivable to factors at a 1% discount. The firm’s average…

A: The factoring services are used by the business to sell out their account receivables at a discount…

Q: Zane Corporation has an inventory conversion period of 79 days, an average collection period of 43…

A: Calculate the cash conversion cycle as follows: Cash conversion cycle = Inventory  period +…

Q: If a firm buys under terms of 1/15, net 40, but actually pays on the 20th day and still takes the…

A: 1/15, net 40 means that the supplier will give an additional discount of 1% to the buyer if the…

Q: Pets Store Inc. sells on terms of 3/20, net 35. What is the effective annual cost of trade credit…

A: The cost of trade credit refers to the financial expense incurred by a company when purchasing goods…

Q: A store will give you a 1.00% discount on the cost of your purchase if you pay cash today.…

A: Given information :Discount rate = 1%Time period for payment due = 1 month Purchase price (Assumed)…

Q: A merchant sells a product on credit for S/ 50,000 and offers to pay it to a client in three bills…

A: 1. The face value of the bills.   Particulars Bill 1 Bill 2 Bill 3 Credit sales amount…

Q: ABCD Corporation has credit sales of $12,690,000 and receivables of $1,970,000. Assume there are 365…

A: Question is based on the concept of Financial ratios

Q: Calculate the nominal annual cost of trade credit under each of the following terms. Assume a…

A: Cost of Trade Credit: The cost of trade credit is calculated using the following formula: Cost of…

Q: nider Industries sells on terms of 2/10, net 25. Total sales for the year are $600,000. Thirty…

A: Days Sales Outstanding means the number of days taken by the firm to collect the payment from their…

Q: %

A: rnom = [Discount % / 1 - Discount % ]  * [ 365 days/ Days credit is outstanding - Discount Period]…

Q: nider Industries sells on terms of 2/10, net 35. Total sales for the year are $600,000. Thirty…

A: Days sales outstanding means the average number of days , a customer take , to make payment. This…

Q: Black Panther Inc. buys on terms of 2/15, net 60 days. It does not take discounts, and it typically…

A: Net purchases = P450,000 Terms of credit = 2/15,net 60 days

Q: When customers purchase goods on account, Spitz Manufacturing offers them a 2% reduction in the…

A: The objective of the question is to identify the correct accounting term for the scenario where…

Q: You have an account with a $1500 credit limit that charges 13.25% interest using the average daily…

A: Account - $1500

Q: ABC Corp. has net credit sales of P1,440,000 yearly with credit terms of n/30, which is also the…

A: Formula: Accounts receivable turnover = Net credit sales / Average accounts receivable Average…