Homework Answers
B.No, because they are paying their suppliers too early.
since annual cost of goods sold = $365 million.
The daily cost of goods sold will be $365, million / 365 =>$1 million.
Since the terms are 3/20 net 30.
payment can be made by 20 days for effective use of credit terms.
If payments are made on 20 th day, the accounts payable balance will be = $1 million * 20 days
=.$20 million.
But it is only $10 million, so it can be said that suppliers are being paid off early.
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