Sue Cole Is a New Accountant with Simon Company

question 59

Essay

Sue Cole is a new accountant with Simon Company. Simon purchased merchandise on account for $9,000. The credit terms are 1/10, n/30. Sue has talked with the company's banker and knows that she could earn 6% on any money invested in the company's savings account.
Instructions
(a) Should Sue pay the invoice within the discount period or should she keep the $9,000 in the savings account and pay at the end of the credit period? Support your recommendation with a calculation showing which action would be best.
(b) If Sue forgoes the discount, it may be viewed as paying an interest rate of 1% for the use of $9,000 for 20 days. Calculate the annual rate of interest that this is equivalent to.

Recognize the complexity of ethical decisions and the contextual nature of moral judgments.

Reflect on personal beliefs and values through the process of interviewing and discussing philosophical questions.

Appreciate the philosophical debates regarding faith, good works, and the nature of divinity.

Understand the philosophical problem of other minds and the limits of subjective experience.

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Definitions:

Interests In Land

Legal rights or claims a person may have in land, including ownership, rental, or usage rights.

Injunction

A legal order issued by a court requiring an individual or entity to do or cease doing a specific action.

Court Decree

A formal and authoritative order issued by a legal court, often finalizing a judgment.

Specific Performance

A legal remedy requiring a party to perform a specific act, usually in fulfillment of a contract.