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

question 89

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 $650,000 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) $106,849
• B) $125,014
• C) $117,534
• D) $123,945
• E) $107,918

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Definitions:

General Damages

General damages refer to a monetary compensation awarded in a lawsuit for non-monetary losses, such as pain and suffering or emotional distress.

Punitive Damages

Monetary compensation awarded to a plaintiff, over and above actual damages, intended to punish a defendant for particularly harmful behavior and deter future similar acts.

Right Eye

Referring to the eye located on the right side of a person's face.

Special Damages

Specific damages that would flow from a breach of contract.