You place an order for 470 units of inventory at a unit price of $175. The suppl

Question

You place an order for 470 units of inventory at a unit price of $175. The supplier offers terms of 2/15, net 90.

a-1 How long do you have to pay before the account is overdue? Days until overdue 90 days a-2 If you take the full period, how much should you remit? Remittance $ b-1 What is the discount being offered? Discount offered 2.00 %

b-2 How quickly must you pay to get the discount? Number of days 15 days

b-3 If you do take the discount, how much should you remit? Remittance

$ c-1 If you don’t take the discount, how much interest are you paying implicitly? Implicit interest $ 1645

c-2 How many days’ credit are you receiving? Days' credit 75 days

Explanation / Answer

a-2)

Taking full period means not exercising the discount offer. Therefore, we have to remit the entire amount of purchase that is

Amount to remit = 470 x 175 =82,250

b)

Here we will receive 2% of ash discount, so amount to remit would be:

Amount to remit = 82,250 x (1-0.02)

                                = 80,605

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