You place an order for 380 units of inventory at a unit price of $165. The suppl
ID: 2717680 • Letter: Y
Question
You place an order for 380 units of inventory at a unit price of $165. The supplier offers terms of 2/15, net 30.
How long do you have to pay before the account is overdue?
If you take the full period, how much should you remit?
What is the discount being offered?
How quickly must you pay to get the discount?
If you do take the discount, how much should you remit?
If you don’t take the discount, how much interest are you paying implicitly?
How many days’ credit are you receiving?
You place an order for 380 units of inventory at a unit price of $165. The supplier offers terms of 2/15, net 30.
Explanation / Answer
a-1
How long do you have to pay before the account is overdue?
The term for payment is : 2/15, net 30.
Days until overdue
30 Days
a-2
If you take the full period, how much should you remit?
The payment shall be equal to the cost and no discount shall be allowed
Remittance = (380 units *$165)
$ 62,700
b-1
What is the discount being offered?
The term for payment is : 2/15, net 30, hence the discount offered is 2%
Discount offered = ($62700*2%)
$ 1,254
b-2
How quickly must you pay to get the discount?
The term for payment is : 2/15, net 30, hence the discount shall be available if we pay within 15 days instead of 30 days
Number of days = (30 days - 15 days )
15 days
b-3
If you do take the discount, how much should you remit?
Remittance = (62700-1254) =
$ 61,446
c-1
If you don’t take the discount, how much interest are you paying implicitly?
Implicit interest = Discount lost =
$ 1,254
c-2
How many days’ credit are you receiving?
The term for payment is : 2/15, net 30.
Days' credit
30 Days
a-1
How long do you have to pay before the account is overdue?
The term for payment is : 2/15, net 30.
Days until overdue
30 Days
a-2
If you take the full period, how much should you remit?
The payment shall be equal to the cost and no discount shall be allowed
Remittance = (380 units *$165)
$ 62,700
b-1
What is the discount being offered?
The term for payment is : 2/15, net 30, hence the discount offered is 2%
Discount offered = ($62700*2%)
$ 1,254
b-2
How quickly must you pay to get the discount?
The term for payment is : 2/15, net 30, hence the discount shall be available if we pay within 15 days instead of 30 days
Number of days = (30 days - 15 days )
15 days
b-3
If you do take the discount, how much should you remit?
Remittance = (62700-1254) =
$ 61,446
c-1
If you don’t take the discount, how much interest are you paying implicitly?
Implicit interest = Discount lost =
$ 1,254
c-2
How many days’ credit are you receiving?
The term for payment is : 2/15, net 30.
Days' credit
30 Days
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