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What is the discount being offered by the supplier

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Reference no: EM133069018

The following data available for UFO Deli Ltd. 

Account

Beginning balance

Ending Balance

Use/source of cash

Accounts payable

27,400

25,500

 

Inventory               

62,600

67,700

 

Long term debts

125,500

95,600

 

Common stock

220,400

245,500

 

Other information:

  • The company just placed an order for 700 kg of chicken drumsticks at a unit price of $3/kg. The supplier offers credit terms of 2/15, net 45.
  • Beginning balance of accounts receivable is $27,500. Ending balance of accounts receivable of $26,800
  • Total revenue (all sales are on credit) is $287,500
  • Total cost of goods sold is $195,000

Required:

1. What is the discount being offered by the supplier to UFO Deli Ltd. ? How quickly must the company pay to get the discount? If the company takes the discount, how much should they pay? 

2. Calculate and identify the source of cash or the use of cash for each account by filling into the column next to the ending balance 

Calculate the operating cycle and interpret the outcome

Reference no: EM133069018

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