Sue Cole is a new accountant with Sunland Company. Sunland purchased merchandise on account for $8,100....
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Sue Cole is a new accountant with Sunland Company. Sunland purchased merchandise on account for $8,100. The credit terms are 1/10, n/30. Sue has talked with the company's banker and knows that she could earn 6% on any money invested in the company's savings account. (a) Your Answer Should Sue pay the invoice within the discount period or should she keep the $8,100 in the savings account and pay at the end of the credit period? Support your recommendation with a calculation showing which action would be best. Sue should Correct Answer (Used) (b) take the discount as it will result in savings of $ Equivalent annual interest rate is If Sue forgoes the discount, it may be viewed as paying an interest rate of 1% for the use of $8,100 for 20 days. Calculate the annual rate of interest that this is equivalent to. (Round answer to O decimal places, e.g. 25%.) 54 % Sue Cole is a new accountant with Sunland Company. Sunland purchased merchandise on account for $8,100. The credit terms are 1/10, n/30. Sue has talked with the company's banker and knows that she could earn 6% on any money invested in the company's savings account. (a) Your Answer Should Sue pay the invoice within the discount period or should she keep the $8,100 in the savings account and pay at the end of the credit period? Support your recommendation with a calculation showing which action would be best. Sue should Correct Answer (Used) (b) take the discount as it will result in savings of $ Equivalent annual interest rate is If Sue forgoes the discount, it may be viewed as paying an interest rate of 1% for the use of $8,100 for 20 days. Calculate the annual rate of interest that this is equivalent to. (Round answer to O decimal places, e.g. 25%.) 54 %
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Related Book For
Fundamental Financial Accounting Concepts
ISBN: 978-0078025907
9th edition
Authors: Thomas Edmonds, Christopher Edmonds
Posted Date:
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