Book Depot Inc. sells on terms of 3/20, net 45. What is theimplicit cost of...

Book Depot Inc. sells on terms of 3/20, net 45. What is the implicit cost of trade credit under these terms? Use a 365-day year.

Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)

Solutions

Expert Solution

- Selling term is 3/20, net 45 which means that 3% discount will be given if Credit is paid within 20 days of the Invoice date and without discount credit has to be paid within 45 days.

Formula for :-

Implicit cost of trade credit

wheree, Discount = 3%

D = Extra Credit days = Normal term days - Discount term = 45 -20 = 25

Implicit cost of trade credit

Implicit cost of trade credit = 1.560029 - 1

Implicit cost of trade credit = 56.00%

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

Pets Store Inc. sells on terms of 1/20, net 65. What is the effective annual cost...

Pets Store Inc. sells on terms of 1/20, net 65. What is the effective annual cost of trade credit under these terms? Use a 365-day year.

Snider Industries sells on terms of 3/10, net 45. Total sales for the year are $1,770,000....

Snider Industries sells on terms of 3/10, net 45. Total sales for the year are $1,770,000. Thirty percent of customers pay on the 10th day and take discounts; the other 70% pay, on average, 50 days after their purchases. Assume 365 days in year for your calculations. What is the days sales outstanding? Round your answer to one decimal place. days What is the average amount of receivables? Round your answer to the nearest dollar. Do not round intermediate calculations....

Snider Industries sells on terms of 3/10, net 45. Total sales for the year are $1,360,000....

Snider Industries sells on terms of 3/10, net 45. Total sales for the year are $1,360,000. Thirty percent of customers pay on the 10th day and take discounts; the other 70% pay, on average, 50 days after their purchases. Assume 365 days in year for your calculations. What is the average amount of receivables? Round your answer to the nearest dollar. Do not round intermediate calculations. $ What would happen to average receivables if Snider toughened its collection policy with...

Snider Industries sells on terms of 3/10, net 45. Total sales for the year are $1,800,000....

Snider Industries sells on terms of 3/10, net 45. Total sales for the year are $1,800,000. Thirty percent of customers pay on the 10th day and take discounts; the other 70% pay, on average, 50 days after their purchases. Assume 365 days in year for your calculations.

A large retailer obtains merchandise under the credit terms of 3/20, net 45, but routinely takes...

A large retailer obtains merchandise under the credit terms of 3/20, 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 365 days in year for your calculations. Do not round intermediate calculations. Round your answer to two decimal places.

Receivables Investment Snider Industries sells on terms of 3/10, net 45. Total sales for the year...

Receivables Investment Snider Industries sells on terms of 3/10, net 45. Total sales for the year are $1,370,000. Thirty percent of customers pay on the 10th day and take discounts; the other 70% pay, on average, 50 days after their purchases. Assume 365 days in year for your calculations. What is the days sales outstanding? Round your answer to one decimal place. days What is the average amount of receivables? Round your answer to the nearest dollar. Do not round...

Pets Store Inc. sells on terms of 2/15, net 50. What is theeffective annual cost...

Pets Store Inc. sells on terms of 2/15, net 50. What is the effective annual cost of trade credit under these terms? Use a 365-day year.Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)

McEwan Industries sells on terms of 3/10, net 20. Total sales for the year are $1,643,000;...

McEwan Industries sells on terms of 3/10, net 20. Total sales for the year are $1,643,000; 40% of the customers pay on the 10th day and take discounts, while the other 60% pay, on average, 74 days after their purchases. Assume 365 days in year for your calculations. What is the days sales outstanding? Round your answer to two decimal places. ________ days What is the average amount of receivables? Round your answer to the nearest cent. Do not round...

McEwan Industries sells on terms of 3/10, net 20. Total sales for the year are $1,409,000;...

McEwan Industries sells on terms of 3/10, net 20. Total sales for the year are $1,409,000; 40% of the customers pay on the 10th day and take discounts, while the other 60% pay, on average, 66 days after their purchases. Assume 365 days in year for your calculations. A. What is the days sales outstanding? Round your answer to two decimal places. _______days B. What is the average amount of receivables? Round your answer to the nearest cent. Do not...

McEwan Industries sells on terms of 3/10, net 20. Total sales for the year are $1,001,500;...

McEwan Industries sells on terms of 3/10, net 20. Total sales for the year are $1,001,500; 40% of the customers pay on the 10th day and take discounts, while the other 60% pay, on average, 52 days after their purchases. Assume 365 days in year for your calculations. What is the days sales outstanding? Round your answer to two decimal places. days What is the average amount of receivables? Round your answer to the nearest cent. Do not round intermediate...

Subjects