Kirk Development Buys on Terms of 2/15,net 60 Days

question 115

Multiple Choice

Kirk Development 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 $550,000 per year.On average,what is the dollar amount of total trade credit (costly + free) the firm receives during the year,i.e.,what are its average accounts payable? (Assume a 365-day year,and note that purchases are net of discounts.)

• A)$ 90,411
• B)$ 94,932
• C)$ 99,678
• D)$104,662
• E)$109,895

---

Definitions:

Accurate

Characterized by precision and correctness in details or measurements.

Cent

A monetary unit in many countries, equal to one-hundredth of the base unit of currency, such as the dollar or euro.

Evaluate

To assess or judge the value, nature, or importance of something.

Decimal Equivalents

Numeric values expressed in decimal form that represent fractions, percentages, or other quantities for easier calculations.