I have this difficult question and do not even know where to start... Taos company purchased merchandise for resale from Tucson w/an invoice price of 22,000 and credit terms 3/10,n/60. The merchandise had cost Tucson 15,000. Taos paid w/in the discount pd. Assume the buyer and seller use perpetual inventory system.
Now the question
1)Assume that the buyer borrowed cash to pay the balance on last day of discount pd. At annual interest rate of 11% &paid it back on the last day of credit pd. Compute how much the buyer saved by following this strategy. (assume a 365 day yr. & round dollar to nearest cent,including computation of interest per day)? This is with analyzing and recording merchandise transactions!