Hinkle Corporation Buys on Terms of 2/15, Net 60 Days

question 22

Multiple Choice

Hinkle Corporation 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

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Definitions:

Medication

A substance used for medical treatment, especially a medicine or drug taken to diagnose, cure, treat, or prevent disease.

Side Effects

Unintended, but fairly mild and common, effects of a medication.

Intravenously

The method of administering medication or fluids directly into a vein.

Injected

refers to the introduction of a substance into the body through a needle and syringe.