Problem 16-09 Cost of Trade Credit Grunewald Industries sells on terms of 3/10, net 30. Gross sales last...

90.2K

Verified Solution

Question

Finance

Problem 16-09
Cost of Trade Credit
Grunewald Industries sells on terms of 3/10, net 30. Gross saleslast year were $4,247,000 and accounts receivable averaged$457,500. Half of Grunewald's customers paid on the 10th day andtook discounts. What are the nominal and effective costs of tradecredit to Grunewald's nondiscount customers? (Hint:Calculate daily sales based on a 365-day year, calculate theaverage receivables for discount customers, and then find the DSOfor the nondiscount customers.) Do not round intermediatecalculations. Round your answers to two decimal places.
Nominal cost %
Effective cost %

Answer & Explanation Solved by verified expert

4.3 Ratings (577 Votes)

See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

Problem 16-09Cost of Trade CreditGrunewald Industries sells on terms of 3/10, net 30. Gross saleslast year were $4,247,000 and accounts receivable averaged$457,500. Half of Grunewald's customers paid on the 10th day andtook discounts. What are the nominal and effective costs of tradecredit to Grunewald's nondiscount customers? (Hint:Calculate daily sales based on a 365-day year, calculate theaverage receivables for discount customers, and then find the DSOfor the nondiscount customers.) Do not round intermediatecalculations. Round your answers to two decimal places.Nominal cost%Effective cost%