Jake Company Purchased on Account Merchandise with a List Price

question 170

Multiple Choice

Jake Company purchased on account merchandise with a list price of $90,000. Payment terms were 1/15, n/45. If payment occurs within 18 days, what discount will Jake Company recognize on the merchandise?

• A)$13,500
• B)$900
• C)$500
• D)$0

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Definitions:

Interest Rate

The percentage of a sum of money charged for its use, often expressed as an annual percentage.

Reserve Requirements

The minimum proportion of customer deposits and notes that a bank must hold as reserves rather than lending out, as mandated by central banking authorities.

Government Bonds

Securities issued by a government to finance its expenditures, offering regular interest payments and the return of the original investment at maturity.

Demand Deposits

Bank accounts that allow the withdrawal of deposited money at any moment, without the need to notify the bank beforehand.