FGH requires a rate of return of 12.85% each year. Two of FGH;s suppliers, P and Q, are off

FGH requires a rate of return of 12.85% each year. Two of FGH’s suppliers, P and Q, are offering the following terms for immediate cash settlement:

 

Entity

Discount period

Normal settlement

P

1%

1 month

Q

2%

2 months

Which of the discounts should be accepted to achieve the required rate of return?

(A) Both P and Q

(B) P only

(C) Q only

(D) Neither of them

A retailing entity had cost of sales of $60,000 in April. In the same month, trade payables increased by $8,000 and inventory decreased by $2,000. What payment was made to suppliers in April?

(A) $50,000

(B) $54,000

(C) $66,000

(D) $70,000

Which ONE of the following services is NOT normally undertaken by a debt factor?

(A) Taking customer orders and invoicing

(B) Attempting to recover doubtful debts

(C) Making payments to entities before the cash is received from trade receivables

(D) Administering a entity’s sales ledger