Annual credit sales of Nadak Co total $340 million The firm gives a 2 cash discount for payment within 10 days of the invoice date 90 of Nadaks accounts receivable are paid within the discount period Required a What is the total amount of cash discounts allowed in a year b Calculate the approximate...

a 2 340000000 90 6120000 or 612 million b By paying within 10 days instead of 30 days t ...

Annual credit sales of Nadak Co. total $340 million. The firm gives a 2% cash discount for

Question:

Annual credit sales of Nadak Co. total $340 million. The firm gives a 2% cash discount for payment within 10 days of the invoice date; 90% of Nadak’s are paid within the discount period.

Required:
a. What is the total amount of cash discounts allowed in a year?
b. Calculate the approximate annual rate of return on investment that Nadak Co.’s cash discount terms represent to customers who take the discount.

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...