Question

Becher Industries has three suppliers for its raw materials for manufacturing. The firm purchases $210 million per year from Johnson Corp. and normally takes 30 days to pay these bills. Becher also purchases $150 million per year from Jensen, Inc., and normally pays Jensen in 45 days. Becher's third supplier, Docking Distributors, offers 2/10, n.30 terms. Becher takes advantage of the discount on the $90 million per year that it typically purchases from Docking. Calculate Becher's expected accounts payable balance. Assume that all purchases are made evenly across the year. (Use a 360-day year for your calculations; for example, calculate Johnson's accounts as $180 million × 30/360.) An answer of $1.2 million should be entered as 1,200,000. Do not round your intermediate calculations. Round your answer to two decimal places.

Answer 1

Answer :Becher Industries Expected Accounts payable Balance= $ 38,750,000

Working:

Becher Industries Expected Accounts payable balance:
Description	Purchase per year	Expected Accounts payable	Calculation
From Johnson Corp	$         210,000,000	$                                17,500,000	210000000*30/360
From Jensen Inc	$         150,000,000	$                                18,750,000	150000000*45/360
From Docking Distributors	$            90,000,000	$                                  2,500,000	90000000*10/360
Total		$                                38,750,000