A firm purchases $4,562,500 in goods over a 1-year period from its sole supplier. The supplier offers
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A firm purchases $4,562,500 in goods over a 1-year period from its sole supplier. The supplier offers trade credit under the following terms: 2/15, net 50 days. Davis finally chooses to pay on time (pay in the 50th day) but not to take the discount. We assume 365 days per year. What is the average level of the company’s free trade credit?
$187,500
Based on the information from Question 31, what is the effective annual cost of the firm’s costly trade credit?
Related Book For
Auditing Cases An Interactive Learning Approach
ISBN: 978-0132423502
4th Edition
Authors: Steven M Glover, Douglas F Prawitt
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