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 p

Q: . A buyer does not take advantage of a supplier's credit terms of 2/10, n/30 but pays in full at the…

A: Companies often encourage their customers to pay early of their dues by introducing trade discounts.…

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: 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: Cainhurst Inc. had sales last year totaling $530,000, and its year-end Accounts Receivable were…

A: Days Sales outstanding refers to the number of days a company/firm takes to collect payment from its…

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: nd the average daily balance for the credit card with the following ansactions. Assume one month…

A: The average balance, also known as the average daily balance, is a financial term that refers to the…

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: Assume the credit terms offered to your firm by your suppliers are 4​/15​, net 30. Calculate the…

A: Discount is the reduction in the cost of product at the time of purchase. The trade discount is the…

Q: Han Corp's sales last year were $300,000, and its year-end receivables were $49,000. The firm sells…

A: The objective of the question is to find out the average number of days late that customers pay…

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: Sway Tailors currently has credit terms of net 30, an average collection period of 29 days, and…

A: The account receivables are also known as the debtors. These are the values due to a firm on which…

Q: Catz Corp. sells its goods with terms of 3/10 EOM, net 45. What is the implicit cost of the trade…

A: Solution: Let's gross price = 100 Net price if paid in 10 days = 100 - 100*3% = 97 Credit period…

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 company is offred trade credit terms of 3/15, net 30 days. If the firm does not take the discount,…

A: The term 2/15, net 30 days means customer will get 3% discount if he pay within 15 days but here…

Q: How much does the account stretching reduce the cost of not taking the trade discount? Select one:

A: Accounts Payable: These are amounts owed to the suppliers or vendors by the firm. These are recorded…

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: 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: 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: Fitzgerald, Incorporated, currently has an all-cash credit policy. It is considering making a change…

A: Net present value refers to the method of capital budgeting used by investors for evaluating the…

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

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

Q: InvisiGuard Ltd sells security doors. Majority of its sales are on credit except small amount of…

A: Allowance for doubtful debt is the estimate of how much of trade receivable balance as on date will…

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…

Q: ullumber Corp. sells its goods with terms of 3/10 EOM, net 45. What is the implicit cost of the…

A: Solution Concept terms of 3/10 EOM, net 45               It means that if the amount is paid by 10th…

Trade Credit

Answer- a- Before Shipping of goods