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Safety Window and Door Co. buys on terms of 2/15, net 60 days. It does not take discounts, and it typically pays on time, 60 days after the invoice date. Net purchases amount to $450,000 per year. On average, how much "free" trade credit does the firm receive during the year? (Assume a 365-day year, and note that purchases are net of discounts.)a. $18,493 b. $20,389 c. $22,479 d. $21,408 e. $19,418

Respuesta :

Answer:

a. $18,493

Explanation:

For determining the free trade credit, first we have to compute the per day net purchase which is shown below:

= Net purchase ÷  Total number of days in a year

= $450,000 ÷ 365 days

= $1,232.87

Now the free trade credit would be

= 15 days ×  $1,232.87

= $18,493

If the amount is paid within 15 days, then the company can avail 2% discount otherwise full amount would be paid