Roton IncPurchases Merchandise on Terms of 2/15,net 40,and Its Gross Purchases

question 24

Multiple Choice

Roton Inc.purchases merchandise on terms of 2/15,net 40,and its gross purchases (i.e.,purchases before taking off the discount) are $800,000 per year.What is the maximum dollar amount of costly trade credit the firm could get,assuming it abides by the supplier's credit terms? (Assume a 365-day year.)

• A)$53,699
• B)$56,384
• C)$59,203
• D)$62,163
• E)$65,271

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Definitions:

Buyer/Lessee

An individual or entity that purchases or leases goods or property from another party under agreed-upon terms.

Common Law Rule

A principle or rule established in previous legal cases that is either binding on or persuasive for a court or other tribunal when deciding subsequent cases with similar issues or facts.

Perfect Tender Rule

A legal principle that requires the delivery of goods to be exactly as specified in the contract without any deviations or defects.

Conforming Goods

Products that meet the specifications and standards outlined in a purchase contract.