Fego Manufacturers granted credit terms of 60 days to Banda Stores but the manufacturer is prepared to allow a rebate of 2½ % if Banda Stores pays the account within 12 days.
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Use the information provided below to determine the cost (as a percentage, expressed to two
decimal places) to Banda Stores of not accepting the discount.
Fego Manufacturers granted credit terms of 60 days to Banda Stores but the manufacturer is prepared to allow a
rebate of 2½ % if Banda Stores pays the account within 12 days.
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Solved in 3 steps
- United Distributors normal credit terms to X-Tyres Stores are 30 days but is prepared to allow a 4% rebate if X-Tyres Stores pays the account within 14 days . Calculate the cost to X-Tyres Stores of not accepting the discount.westside traders normal credit terms to east-rand manufactures are 60 days but is prepared to allow a 4% rebate if it pays the account within 30 days. calculate the cost to east-rand manufactures of not accepting the discount.On february 5, 2018, nicanor merchandising has purchased goods on account amounting to 500,000 with credit terms of 3/15, n/60 from its major trade supplier. nicanor operates 360 days a year. Required: 1. compute the nominal cost of trade credit 2. compute the effective cost of trade credit 3. assuming nicanor did not pay the account within the discount period, how much is the penalty in using the money for the next 45 days? 4. in case the prevailing interest rate on bank loan is 20% per annum at simple interest, should nicanor pay within the discount period or not? Breifly discuss your answer and present supporting computation. 5. determine the net monetary benefit that nicanor will enjoy in selecting the optimal alternative. please answer 3-5 thank you
- A large retailer obtains merchandise under the credit terms of 3/10, net 45, 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.The buyer received an invoice from the seller for merchandise with list price of RO 3500 and credit terms of 2/EOM and n/30. The meaning of 2/EOM is a. A buyer who pays by the end of the month of purchase cannot deduct 2% discount b. If the buyer is not paid within the end of month, the entire invoice will be given 2% discount c. A buyer who pays by the end of the month of purchase may deduct RO 3500 d. A buyer who pays by the end of the month of purchase may deduct RO 70 discountOn february 5, 2018, nicanor merchandising has purchased goods on account amounting to 500,000 with credit terms of 3/15, n/60 from its major trade supplier. nicanor operates 360 days a year. Required: 3. assuming nicanor did not pay the account within the discount period, how much is the penalty in using the money for the next 45 days? (please answer) 4. in case the prevailing interest rate on bank loan is 20% per annum at simple interest, should nicanor pay within the discount period or not? Breifly discuss your answer and present supporting computation. (please answer) 5. determine the net monetary benefit that nicanor will enjoy in selecting the optimal alternative. (please anwer)
- A large retailer obtains merchandise under the credit terms of 3/10, net 30, but routinely takes 50 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. Don't use ExcelWashington Products offers credit terms of 3/10, n/45. Which of the following statementsis correct?a. The customer can take a 3% discount if the bill is paid within 45 days of the invoice date.b. The total amount of the invoice must be paid within 10 days of the invoice date.c. A discount of 3% can be taken if the invoice is paid within 10 days of the invoice date.d. No discount is offered for early payment.Brand Advertising is offered a 3/10 net 40 trade discount by its supplier. In the past Brand has been able to get away with paying for supplies on credit in 60 days. Since it doesn't have money on hand to take advantage of the discount, it tries to negotiate a loan with Second Canadian Bank. The amount of $375,000 with a 15% compensating balance and a $5,500 interest charge has been negotiated for the month of May. Brand already maintains a $16,250 balance at the bank. Compute the annual rate of interest on the loan, and the cost of not taking the discount. Which one should Brand take? Talmund Book company borrows $16,000 for 30 days at 9% interest. What is the dollar cost of the loan? Calculate the cost of discounting a $100,000 bankers’ acceptance if it is due in 90 days and is sold at $97,915. Ignore bank fees.
- The credit terms offered to a customer by a business firm were 2/10, n/30, which means the customer can deduct a 2% discount if the bill is paid between the 10th and 30th day from the invoice date. the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date. two sales returns can be made within 10 days of the invoice date and no returns thereafter. the customer must pay the bill within 10 days.The credit terms offered to a customer by a Merchandise Business are 2/10, n/30, which means that a. The customer can deduct a 2% discount if the bill is paid within 30 days of the invoice date. The customer can deduct a 2% discount if the bill is paid between the 10th and 30th day from the invoice date. c. The customer must pay the bill within 10 days. d. The customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date.Carla Vista Choice sells natural supplements to customers with an unconditional sales return if they are not satisfied. The sales returns extends 60 days. On February 10, 2021, a customer purchases on account $3500 of products (cost $1750). Assuming that based on prior experience, estimated returns are 20%. The journal entry to record the expected sales return includes a debit to Cash and a credit to Sales Revenue of $3500. debit to Sales Returns and Allowance of $700 and a credit to Allowance for Sales Returns and Allowances of $700. credit to Estimated Inventory Returns of $350. debit to Cost of Goods Sold and credit to Inventory for $1750.
