Each of the Following Situations Involves the Use of Discounts

question 47

Essay

Each of the following situations involves the use of discounts:
1.How much discount may Mallory Inc.take in each of the following transactions?
What was the annualized interest rate?
a.Mallory purchases inventory costing $970,terms 3/10,n/40.
b.Mallory purchases new office furniture costing $2,100,terms 2/10,n/30.
2.Calculate the discount rate that Mallory received in each of these transactions.
a.Mallory purchased office supplies costing $450 and paid within the discount period with a check for $425.
b.Mallory purchased merchandise for $1,900.It paid within the discount period with a check for $1,870.

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Definitions:

Financing

The act of providing funds for business activities, making purchases, or investing.

Operations

The day-to-day activities involved in running a business, including production, sales, and administration, aimed at generating profits.

Total Assets Ratio

A financial metric used to assess the proportion of a company's assets that are financed by its shareholders.

Average Total Assets

Average total assets is a metric that represents the average value of all the assets owned by a company over a specific time period, indicating the company's asset size and usage efficiency.