Use the Information to Answer the Following Question(s)

question 22

Multiple Choice

Use the information to answer the following question(s) .
Jackson Automotive Inc. of California agrees to sell specialized automotive parts to Hidatsi of Korea. Because the two companies have never done business with each other, Jackson requires a banker's acceptance as payment for the $1,000,000 order. The banker's acceptance carries a 1.4% commission per annum and payment is to be received in 6 months. If Jackson Inc. chooses to discount or sell the bankers acceptance to its bank, the discount rate is 1.00% per annum.
-Refer to Instruction 19.1.What is the size of the discount (not including the commission fee) Jackson must take for receiving the proceeds of the sale today rather than waiting for six months?

• A)$7,000
• B)$5,000
• C)$12,000
• D)$14.000

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Definitions:

Colonial Assemblies

Elected bodies in the American colonies that represented colonists and had the authority to legislate and make decisions on local matters.

Acts of Parliament

Legislation passed by the Parliament, which forms the statutory laws of the country.

Stamp Act

A 1765 British law imposed on the American colonies requiring them to pay a tax on printed materials, which led to widespread protest.

Revenue

Revenue is the total amount of income generated by the sale of goods or services related to a company's primary operations.