User Account

All Pages

What is the approximate annual cost of costly trade credit

Assignment Help Accounting Basics
Reference no: EM132866127

Question - Northeast Baptist buys $500,000 of a particular item (at gross prices) from its major supplier, Cardinal Health, which offers NE Baptist terms of 3/20, net 60. Currently, the hospital is paying the supplier the full amount due on Day 60, but it is considering taking the discount, paying on Day 20 and replacing the trade credit with a bank loan that has a 12 percent rate.

Required -

a. What is the amount of free trade credit that Baptist obtains from Cardinal Health? (Assume 360 days per year throughout this problem.)

b. What is the amount of costly trade credit?

c. What is the approximate annual cost of the costly trade credit?

d. Should Baptist replace its trade credit with the bank loan? Explain your answer.

e. If the bank loan is used, how much of the trade credit should be replaced?

Reference no: EM132866127

Questions Cloud

Taylor and rioux refer to as the work of reproduction : Both Norma and Shimu are working-class women in societies characterized by class and gender inequality. How does their identity as women shape the way they expe
How struggle has played out on the issues of immigration : How struggle has played out on the issues of immigration and health care since 2008. In your answer, be sure to mention specific executive
What is business intelligence : -What is Business Intelligence? The answer to this question can vary as the term means many different things to many different people.
List two high priority action items : you would include in a consulting report to Steve Morgan, President of ElectroLogic. did you select these two actionable items.
What is the approximate annual cost of costly trade credit : Northeast Baptist buys $500,000 of a particular item (at gross prices) from its major supplier, What is the approximate annual cost of the costly trade credit
What ways does the claim have scientific validity : Could fate be avoided if scientists, engineers and societies across the world alter their energy and transportation systems to lessen greenhouse gas emissions?
What was the catastrophic event : What communication strategy did your chosen company use and did you feel is was an effective approach?
How successful international agreement on limit greenhouse : Why was the Montreal Protocol of 1987 a success, whereas the ability to cap global greenhouse gas emissions by binding treaty has met with less success
Mitigate the impact of risks on portfolio : Describe how a portfolio manager may help to mitigate the impact of these risks on portfolio.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Which of the statements is true of activity-based costing

Which of the statements is true of activity-based costing? In activity-based costing, direct labor-hours is always the best allocation base to allocate

  Compute the break-even point in units and dollars

Glacial Company estimates that variable costs will be 63.6% of sales, and fixed costs will total $682,000. Compute the break-even point in units and dollars

  What is the appropriate interest entry on December

The lease payments are due each January 1, beginning in 2018. What is the appropriate interest entry on December 31, 2018

  Record entry to close dividend account to retained earnings

July 14-Record the entry on the date of payment for the cash dividend. July 31-Record the entry to close the dividend account to retained earnings.

  Prepare the following for machine a

Pele uses the units-of-activity method and estimates that the useful life of the machine is 125,000 units. Actual usage is as follows: 2010, 45,000 units; 2011, 35,000 units; 2012, 25,000 units; 2013, 20,000 units.

  Discuss what information as a stock purchaser

What information, as a stock purchaser, would you find beneficial, if you had free and open access to a business' financial records

  Which statements about contribution format income statement

Which statements about contribution format income statement is incorrect? It is used as an internal planning and decision making tool

  What is the value of the assets required by the debt

What is the value of the assets required by the debt holders to permit a fair interest rate of approximately 10%

  Will exchanges a building with a fmv of 80000 a basis of

will exchanges a building with a fmv of 80000 a basis of 35000 and subject to a liability of 30000 for land with a fmv

  Discuss the equity accounting for innex ltd

discuss what the differences would be in the equity accounting for Innex Ltd

  Find the missing amount if the beginning assetbeginning

find the missing amount if the beginning asset.beginning asset is unknown beginning liability is 8900. ending asset is

  What are breakeven sales in dollars

The selling price per dozen is $15, variable costs are $9 per dozen, and total fixed costs are $4,200. What are breakeven sales in dollars?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd