Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello

Exercise 26

Outback Sporting Goods purchases merchandise on terms of 4/10. n/60. The company has a line of credit that enables it to borrow money as needed from Northern Bank at an annual interest rate of 13 percent. Should Outback pay its suppliers within the 10-day discount period if it must draw on its line of credit (borrow from Northern Bank) to make these early payments? Explain.