Problem 16-9 Cost of Trade Credit Grunewald Industries sells on terms of 3/10, n
ID: 2717867 • Letter: P
Question
Problem 16-9
Cost of Trade Credit
Grunewald Industries sells on terms of 3/10, net 50. Gross sales last year were $4,131,000, and accounts receivable averaged $482,000. Half of Grunewald's customers paid on the 10th day and took discounts. What are the nominal and effective costs of trade credit to Grunewald's nondiscount customers? (Hint: Calculate sales/day based on a 365-day year; then get average receivables of discount customers; then find the DSO for the nondiscount customers.) Do not round intermediate calculations. Round your answers to two decimal places.
Nominal cost % Effective cost %Explanation / Answer
Problem 16-9 Cost of Trade Credit Grunewald Industries sells on terms of 3/10, n