You place an order for 540 units of inventory at a unit price of $170. The suppl

Question

You place an order for 540 units of inventory at a unit price of $170. The supplier offers terms of 2/15, net 60. a-1 How long do you have to pay before the account is overdue? Days until overdue 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 % b-2 How quickly must you pay to get the discount? Number of days 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 $ c-2 How many days’ credit are you receiving? Days' credit days

Explanation / Answer

Order Qty 540 units Unit Price 170 $ Order Value $     91,800 Term 2/15, n60. a1 I have to pay within 60 days before it is overdue. Days unitl overdue= Days 60 a2 If I take the full period , Remittance =$91,800 b1 Discount being Offered is 2% b2 I need to pay within 15 days to get the discount No of days 15 days b3 If I take the discount I need to remit 98% of payable; Remittance =$89,964 c1 If I donot take discount , I pay implicit interest of 2% Implicit interest amount $1,836 c2 If I do not take discount , I get total 60 days or additional 45 days of credit .

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