Each of the following situations involves the use of discounts:
1. How much discount may Seals Inc. take in each of the following transactions? What was the annualized interest rate?
a. Seals purchases inventory costing $450, terms 2/10, n/40.
b. Seals purchases new office furniture costing $1,500, terms 1/10, n/30.
2. Calculate the discount rate that Croft Co. received in each of these transactions.
a. Croft purchased office supplies costing $200 and paid within the discount period with a check for $196.
b. Croft purchased merchandise for $2,800. It paid within the discount period with a check for $2,674.