Taos company purchased merchandise for resale from tuscon

Reference no: EM13603827

Taos Company purchased merchandise for resale from Tuscon Company with an invoice price of $22,000 and credit terms of 2/10, n/60. The merchandise had cost Tuscon $15,004. Taos paid within the discount period. Assume that both buyer and seller use a perpetual inventory system.

Assume that the buyer borrowed enough cash to pay the balance on the last day of the discount period at an annual interest rate of 11% and paid it back on the last day of the credit period. Compute how much the buyer saved by following this strategy.

Reference no: EM13603827

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