Question 1A company observes that the value date for an electronic transfer payment to one ofits suppliers for providing it with components, occurs 3 days earlier than if it issued acheque for the same payment and value. So the company prefers to pay the supplierby cheque. When it realizes this, the supplier offers a discount to the company toincentivise it to pay by electronic transfer instead of by cheque. How much of adiscount in percentage terms should the discount offered by the supplier be? Assumethat an electronic payment cost is 0.5 percent higher than the cost of issuing a chequeand that the prevalent market discount rate is 5 percent. Also assume that there isfloat neutrality.

A customer is trying to offer a discount good enough for the supplier to make electronic payment…

Answered: A company observes that the value date…

Business/Professional Ethics Directors/Executives/Acct

8th Edition

ISBN:9781337485913

Author:BROOKS

Publisher:BROOKS

Chapter5: Corporate Ethical Governance & Accountabililty

Section: Chapter Questions

Problem 19.1EC

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Question The average collection period is the average amount of time that elapses from a credit sale until the company can use the payment (collection) of the sale. True or false?
Sales-Related Transactions After the amount due on a sale of $172,675, terms 2/10, n/30, is received from a customer within the discount period, the seller consents to the return of the entire shipment. The cost of the merchandise returned was $103,605. If required, round your answers to nearest whole value. a. What is the amount of the refund owed to the customer? b. Illustrate the effects on the accounts and financial statements of the return and the refund. If no account or activity is affected, select "No effect" from the dropdown and leave the correspondir number entry box blank. Enter account decreases, net cash outflows, and all negative effects on net income as negative amounts. Balance Sheet Stockholders' Assets Liabilities Equity Cash v + Inventory v Est. Returns Inventory = Customer Refunds Payable v + No effect v Statement of Cash Flows Income Statement Operating v No effect v
You receive an invoice for $18,300 with terms of 5/15, n/60. If the supplier has a policy of allowing a cash discount for partial payments and you pay $11,500 within the discount period, calculate the amount of credit you will receive for this payment. a) $12,105.26 b) $12,105.0 c) $12.105
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Which of the following cases show(s) the situation(s) that the list price is higher than the net price after a deduction as stated on the sales invoice? 1. There is a trade discount of 5% given by the seller 2. There is a cash discount of 5% given by the seller 3. Some goods are returned to the supplier
Sales-Related Transactions After the amount due on a sale of $145,225, terms 2/10, n/30, is received from a customer within the discount period, the seller consents to the return of the entire shipment. The cost of the merchandise returned was $79,874. If required, round your answers to nearest whole value. a. What is the amount of the refund owed to the customer?$fill in the blank 1 b. Illustrate the effects on the accounts and financial statements of the return and the refund. If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases, net cash outflows, and all negative effects on net income as negative amounts.
Questions When Tesla receives a $1,000 reservation payment from a customer, what Tesla general ledger accounts does this $1,000 impact? Explain. Now assume that a customer orders a Model 3 by completing the purchase agreement. Will this purchase agreement directly impact Tesla’s balance sheet or income statement at the date of the purchase agreement? When the Model 3 is delivered to the customer and payment is received, how will Tesla’s balance sheet and income statement be impacted at the point of delivery?
One Corporation has two potentialsuppliers. Both are supplying the items atsimilar list prices and trade,discounts.However, Supplier A.offered a credit term of2/10, n/30 and the.other offered a term of3/10, n/40. Which of the following statementsis true? a. Alpha should choose Supplier A and pay on the 10th day.b. Alpha should choose Supplier B and pay on the 10th day.c. Alpha can choose either supplier and always pay on the 10th day.d. If Alpha chose Supplier B, the former should pay on the 30th day so that it can maximize the trade discount
The business made a sale of OMR 21000 ( | cost was OR 18000), on credit basis. The effect on Account Receivable will be : Select one: O a. Account Receivable will decrease by OMR 21000 O b. Account Receivable will increase by OMR 18000 O c. Account Receivable will increase by OMR 21000 O d. Account Receivable will decrease by OMR 18000
Firms usually offer their customers some form of trade credit. This allowance comes with certain terms of credit, which affect the cost of asset of sale for the buyer as well as the seller. Consider this case: Free Spirit Industries Inc. buys on terms of 1/20, net 45 from its chief supplier. If Free Spirit receives an invoice for $1,254.98, what would be the true price of this invoice? (Note: Round all intermediate calculations to four decimal places, and your final answer to two decimal places.) O $1,304.55 $1,056.07 $1,242.43 O $1,118.19 The nominal annual cost of the trade credit extended by the supplier is , assuming a 365-day year. (Note: Round all intermediate calculations to four decimal places, and your final answer to two decimal places.) Suppose Free Spirit does not take advantage of the discount and then chooses to pay its supplier late-so that on average, Free Spirit will pay its by paying late. (Note: supplier on the 50th day after the sale. As a result, Free Spirit can…

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