Kirk Development Buys on Terms of 2/15,net 60 Days

question 115

Multiple Choice

Kirk Development 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:

Uses and Gratification Theory

A theory that explores how individuals actively seek out media to satisfy specific needs and desires, such as information, personal identity, integration and social interaction, or entertainment.

Target Public

The specific group of people at whom public relations or marketing activities are directed, often a key audience for a company or organization.

Social Proof

The psychological phenomenon where people assume the actions of others in an attempt to reflect correct behavior for a given situation.

Group Conformity

The phenomenon where individuals in a group tend to match their beliefs, attitudes, and behaviors to those of the group.