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Accounting: Trade Credit Discounts

Can someone please help me with these problems?

Approximate Interest Rate = Discount % / (1-Discount %) x (365/Net period)

Trade credit discount. Compute the annual approximate interest cost of not taking a discount using the following scenarios. What conclusion can be drawn from the calculations? a. 1/10 net 20 b. 1/10 net 30 c. 1/10 net 40 d. 1/10 net 50 e. 1/10 net 60

Trade credit discount. Compute the annual approximate interest cost of not taking a discount using the following scenarios. What conclusion can be drawn from the calculations? a. 2/15 net 20 b. 2/15 net 30 c. 2/15 net 40 d. 2/15 net 50 e. 2/15 net 60

Trade credit discount. Compute the annual approximate interest cost of not taking a discount using the following scenarios. What conclusion can be drawn from the calculations? a. 1/15 net 30 b. 1/10 net 30 c. 1/15 net 30 d. 1/20 net 30

Trade credit discount. Compute the annual approximate interest cost of not taking a discount using the following scenarios. What conclusion can be drawn from the calculations? a. 2/5 net 30 b. 2/10 net 30 c. 2/15 net 30 d. 2/20 net 30

Trade credit discount. Compute the annual approximate interest cost of not taking a discount using the following scenarios. What conclusion can be drawn from the calculations? a. 1/10 net 30 b. 2/10 net 30 c. 3/10 net 30 d. 4/10 net 30

Trade credit discount. Compute the annual approximate interest cost of not taking a discount using the following scenarios. What conclusion can be drawn from the calculations? a. 1/15 net 30 b. 2/15 net 30 c. 2/15 net 30 d. 4/15 net 30.

Solution Summary

The trade credit discounts for accounting are examined. The approximate interest rates are given.

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