Hinkle Corporation buys on terms of 2/15, net 60 days. It does not take discounts, and it typically pays on time, 60 days after the invoice date. Net purchases amount to $550,000 per year. On average, what is the dollar amount of total trade credit (costly + free) the firm receives during the year, i.e., what are its average accounts payable? (Assume a 365-day year, and note that purchases are net of discounts.)   a. $94,932   b. $109,895   c. $90,411   d. $104,662   e. $99,678

Q: Data on Shicksal Inc. for 2021 are shown below, along with the days sales outstanding of the firms…

A: The question is based on the concept of Financial Accounting.

Q: You prefer to extend credit on the assumption that you will be paid in full within 10 days of the…

A: Variables in the question:Average inventory=$ 720,000Cash sales (no credit sales)= $4,400,000…

Q: New receivable balance c-1. If Maddox reduces its bank loans, which cost 12 gain or loss to the…

A: Accounts receivable is the total amount that is to be received from a customer in exchange for goods…

Q: dit terms of net 30. Its accounts are, on average, 7 days past due. Annual credit sales are $9.6…

A: The accounts receivable would be the proportionate annual credit sale amount pending on the balance…

Q: Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…

A: Interest rate= Prime rate +4% = 8% + 4%= 12% Interest is calculated for the number of days on…

Q: d be employed. Only one proposal has so far been put forward concerning the management of trade…

A: 1. Credit policies are critical documents for nearly every organization, but especially for those…

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: ection period. BECK does not offer discounts for early payment; thus, customers take the full 30…

A: Basic concept of cash discount and receivable collection period

Q: Dome Metals has credit sales of $468,000 yearly with credit terms of net 60 days, which is also the…

A: Firm often make strategies to collect account receivables outstanding balance at an early point of…

Q: Atreides International has operations in Arrakis. The balance sheet for this division in Arrakeen…

A: The balance sheet is a financial report which deposits the financial position of an entity at a…

Q: Your company has arranged a revolving credit agreement for up to $82 million at an interest rate of…

A: Credit arrangement: $82 millionInterest rate: 1.51% per quarterCompensating balance: 4%Interest rate…

Q: Mavericks Cosmetics buys $3,305,717 of product (net of discounts) on terms of 5/10, net 60, and it…

A: Effective percentage cost of trade credit considers the compounding effect.Following is the formula…

Q: A firm buys on terms of 3/15, net 45. It does not take the discount, and it generally pays after 60…

A: Discount rate = 0.03 (i.e. 3%) Payment days = 60 Discount days = 15 Nominal annual percentage cost…

Q: A firm has no cash sales (all sales are on credit and are collected 28 days after the sale). If the…

A: Average collection period is one of efficiency ratio which is used in business. This shows time…

Q: Gonzales Company currently uses maximum trade credit by not taking discounts on its purchases. The…

A: Net income:Net income is the total amount of money that a business or individual has left over…

Q: Zane Corporation has an inventory conversion period of 48 days, an average collection period of 26…

A: Cash conversion cycle(CCC) will be CCC =Inventory conversion period + Average collection period…

Q: Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…

A: The objective of the question is to calculate the new balance of Cook Security Systems' line of…

Q: Bingo Inc. sells on term 3/20, net 40. Total sale for the year are P1,200,000 on which 40% is cash…

A: Total sales = P1,200,000 Cash sales = 40%

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: Aggarwal Inc. buys on terms of 2/15, net 45, and it always pays on the 45th day. The CFO calculates…

A: We know that:The average amount of costly trade credit carried by the firm is $275,000.The firm pays…

Q: Newsome Inc. buys on terms of 3/15, net 45. It does not take the discount, and it generally pays…

A: Nominal annual percentage cost=[Discount rate / (100-Discounting rate ) * [365 /(Total days to pay -…

Q: Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…

A: The line of credit is the maximum limit of credit that a customer can avail from the financial…

Q: AL Enterprises purchases P4,562,500 in goods per year from its sole supplier on terms of 2/15, net…

A: Discount rate = 0.02 (i.e. 2%) Allowed payment days = 50 Discount days = 15

Q: Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…

A: Calculation of new balance are as follows

Q: Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…

A: New balance  = balance  on 31 October  + interest

Q: Newsome Inc. buys on terms of 4/10, net 45. It does not take the discount, and it generally pays…

A: Effective annual percentage = (1+[Discount rate/(1–Discount Rate)])^n– 1 Where n= No. of days in a…

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: A wholesale company needs to borrow $600,000 to finance inventory for the upcoming seasonal rush.…

A: A borrower gets an interest quote for a borrowing, however it needs to maintain a compensating…

Q: Ex/ A company sells $10,000 in merchandise to a buyer on finance.Another financial institution has…

A: FV is the $10,000 in merchandise the company sold,r is the discount rate of 4% per year (0.04 as a…

Q: Last year, the sales of OSP Inc. Amounted to R5 million and its most recent statement of financial…

A: B. Net benefit of approximately R13,000.Explanation:To determine the net benefit or cost of the…

Q: If ABC Corporation has annual credit sales of Ᵽ990,000 and its average accounts receivable is…

A: The Numerical has covered the concept of Accounting Ratio.  The Formula is used to calculate the…

Q: Aggarwal Inc. buys on terms of 2/10, net 30, and it always pays on the 30th day. The CFO calculates…

A: Costly trade credit = Purchases per day*(days credit outstanding- discount period)$350,000 =…

Q: Brady and Sons uses accounts receivable as collateral to borrow money for operations and payroll…

A: Interest is the amount of charge that is being levied on invested amount. It can be simple interest…

Q: If a firm buys under terms of 3/15, net 30, but actually pays on the 20th day and still takes the…

A: Companies gives discount to the customers for early payments to customers but that is cost to…

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…

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.