Buskirk construction buys on terms of 2/10 net 60 days. It does not take discounts, and it typically pays on time, 60 days after the invoice date. Net purchases amount to 500000 per year. On average how much free trade credit

$13698.63

Explanation:

Data provided as per the question

Net purchase amount = $500,000

Terms = 2/10 net 60 days

The computation of free trade credit is shown below:-

Cycle purchase per credit = $500,000 × 60 ÷ 365

= $82,191.78

Per credit cycle of free trade

= $82,191.78 × 10 ÷ 60

= $13698.63

Therefore, for computing the per credit cycle of free trade we simply divide days by total number of days multiply by cycle purchase per credit.

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