Discounts 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 offi ce 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 offi ce 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.

AppendixLO1