Question 2ECM Manufacturing Company Limited has three (3) possible suppliers, all of whichoffer different credit terms. Apart from the slight differences in credit terms, theirproducts and services are virtually identical. The credit terms offered by these suppliersare shown in table shown on the next page.SupplierCredit TermsSupplier 11/10 net 30 EOMSupplier 22/20 net 75 EOMSupplier 33/10 net 50 EOMa.Assuming a 365-day year, answer the following.Identify and describe two major sources of spontaneous short-term financingavailable to ECM Manufacturing please include Accounts payable andAccrued Expenses are the two spontaneous short-term financingavailable to Ecm Manufacturingb.Calculate the approximate cost of giving up the cash discount from eachsupplier

1. Sources of Spontaneous Short-Term Financing: - Accounts Payable: This represents the amount owed…

Answered: Question 2 ECM Manufacturing Company…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter5: Sales And Receivables

Section: Chapter Questions

Problem 47BE: Percentage of Credit Sales Method Ruby Red manufactures, markets, and distributes citrus flavored...

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Similar questions

If a firm's supplier has a 3/10/60 credit policy, the cost of trade credit per period is equal to a. 3.09% b. 22.58% c. 3% d. 97% e. None of the above
6. Calculate the EIR, if the trade credit under each of the following: a) 2/10,n/60 b) 2/10, 1/60 show formula and solutions
Assume the credit terms offered to your firm by your suppliers are 4/15, net 30. Calculate the cost of the trade credit if your firm does not take the discount and pays on day 30
Explain the trade credit facility provided by some companies to their customers that allow them to manage their day-to-day liquidity situation and calculate the opportunity cost of an invoice that specifies the following conditions, as shown below (a. – c.):a) conditions: 1.25/10, n/30.b) conditions: 1.25/10, n/60.c) conditions: 1.5/10, n/60.
The following are the three suppliers of ABC corp with different credit terms: Purchase from A with credit terms of 1.5/15, net 30; Purchase from D with credit terms of 1/10, net 30;and Purchase from E with credit terms of 2/10, net 60.The company may obtain a bank loan offering 20% interest rate.Which of the two suppliers has a better or attractive offer for ABC Corp? • A • None of them • D • E
25 [Question text] Credit and collection policies affect all of the following EXCEPT _____________________. Select one: A. level of sales B. length of time before credit sales are collected C. pricing policies D. terms of sales
The contra revenue account that represents the reduction in the amount paid by a credit customer if payment is made within a specified period of time is known as which of the following: O Contra revenue account O Sales allowance account O Sales discount account O Allowance for uncollectible accounts ASUS f3 f4 f5 f6 f7 f8 f9 f10 f11 区ロ/京 %24 & 3 4. 7. 8 9. 01 Y U G H. J K 16 5 图

11:/13 Problem 2-2U S) William Company operates a customer loyalty program. T entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchane for goods of the entity. The pointa have no expiry date. During 2020, the entity issued 100,000 award credits and expects that 80% of these award credits shall be redeemed The total stand-alone selling price of the award credita granted is reliably measured at P2,000,000. In 2020, the entity sold goods to customers for a total consideration of P8,000,000 based on stand-alone selling price. The award credits redeemed and the total award credits expected to be redeemed each year are as follows: Redeemed Expected to be redeemed 2020 2021 30,000 15,000 80% 90% 1. What is the revenue from points for 2020? 1,600,000 b. a. 1.500,000 600,000 d. 480,000 2. What is the revenue from points for 2021? a. 240,000 b. 200,000 120,000 04.29
first drop down: credit terms credit standards collection policy Second drop down: 35.54 37.63 41.81 29.27 Third drop down: 53,326,759 50,520,087 61,746,773 56,133,430
Question 1 A company observes that the value date for an electronic transfer payment to one of its suppliers for providing it with components, occurs 3 days earlier than if it issued a cheque for the same payment and value. So the company prefers to pay the supplier by cheque. When it realizes this, the supplier offers a discount to the company to incentivise it to pay by electronic transfer instead of by cheque. How much of a discount in percentage terms should the discount offered by the supplier be? Assume that an electronic payment cost is 0.5 percent higher than the cost of issuing a cheque and that the prevalent market discount rate is 5 percent. Also assume that there is float neutrality.
P15–6 Early payment discount decisions Prairie Manufacturing has four possible suppliers, all of which offer different credit terms. Except for the differences in credit terms, their products and services are virtually identical. The credit terms offered by these suppliers are shown in the following table. (Note: Assume a 365-day year.) Supplier Credit terms J 1/5 net 30 EOM K 2/20 net 80 EOM L 1/15 net 60 EOM M 3/10 net 90 EOM Calculate the approximate cost of giving up the early payment discount from each supplier. If the firm needs short-term funds, which are currently available from its commercial bank at 9%, and if each of the suppliers is viewed separately, which, if any, of the suppliers’ early payment discounts should the firm give up? Explain why. Now assume that the firm could stretch by 30 days its accounts payable (net period only) from supplier M. What impact, if any, would that have on your answer in part brelative to this supplier?
Which of the following refers to the ability of a firm to buy repeatedly from a supplier on trade credit without re-applying for credit? Select one: a. Net terms b. Cash discount c. Open account d. Present value of delayed payment

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