On average, your firm sells $38,700 of items on credit each day. The firm's average operating cycle is 49 days

On average, your firm sells $38,700 of items on credit each day. The firm's average operating cycle is 49 days and it acquires and sells inventory, on average, every 17 days. What is the average accounts receivable balance?    A.  $657,900 B.  $848,000 C.  $1,238,400 D.  $1,315,500 E.  $1,896,300 Accounts receivable balance = $38,700 × (49 - 17) = $1,238,400

60.	The Winter Store just purchased $48,300 of goods from its supplier with credit terms of 2/10, net 25. What is the discounted price?    A.  $43,470 B.  $46,209 C.  $47,334 D.  $47,929 E.  $48,300 Discounted price = $48,300 × (1 - 0.02) = $47,334

61.

Today, October 12, Nadine's Fashions purchased $511 worth of merchandise from a supplier. The credit terms are 1/5, net 20. By what day does Nadine's have to make the payment to receive the discount? Note: October has 31 days.    A.  October 13 B.  October 15 C.  October 17 D.  October 27 E.  November 1 End of discount period = October 12 + 5 days = October 17

62.

A supplier grants your firm credit terms of 2/10, net 40. What is the effective annual rate of the discount if the firm purchases $4,800 worth of merchandise?    A.  27.24 percent B.  26.57 percent C.  28.80 percent D.  29.03 percent E.  29.27 percent Days in period = 40 - 10 = 30; Periods per year = 365/30 = 12.166667 Interest rate for 30 days = [0.02 × $4,800]/[(1 - 0.02) × $4,800] = 0.0195578 Effective annual rate = (1 + .01955780195578)12.166667 - 1 = 26.57 percent