Use the following information for the question(s)below.
Wyatt Oil has the following accounts on its books: Wyatt extends credit on terms of 1/15,net 30.
-The percentage of Wyatt's receivables that are still eligible to take the discount is closest to:
A)20.1%.
B)32.1%.
C)38.3%.
D)42.2%.

Question

Use the following information for the question(s)below.
Wyatt Oil has the following accounts on its books:  Wyatt extends credit on terms of 1/15,net 30.
-The percentage of Wyatt's receivables that are still eligible to take the discount is closest to:
A)20.1%. 
B)32.1%. 
C)38.3%. 
D)42.2%.

Quizplus · Accepted Answer

The terms of 1/15,n/30 means that customers can receive a 1% discount if they pay within 15 days, otherwise the full amount is due within 30 days. Therefore, customers who pay within 15 days are eligible for the discount.

To find the percentage of receivables that are still eligible for the discount, we need to find the percentage of total receivables that are less than or equal to 15 days old.

Let's assume Wyatt Oil has $100 of receivables on its books. If all customers pay within 15 days, Wyatt Oil will receive $99 ($100 - $1 discount). If all customers pay after 15 days but before 30 days, Wyatt Oil will receive $100 (full amount). If any customers pay after 30 days, they will be late and may incur additional fees or interest charges.

Therefore, if all customers pay within 15 days: 
- $1 of the receivables will be discounted 
- $99 of the receivables will be collected without discount

If all customers pay within 30 days: 
- $100 of the receivables will be collected (with or without discount)

Let's assume that of the $100 receivables on Wyatt Oil's books, $32 are less than or equal to 15 days old.

Therefore, the percentage of receivables that are still eligible to take the discount is:

($1 of the $100 receivables) / ($32 of the $100 receivables that are less than or equal to 15 days old) 
= 1 / 32 
= 0.03125 
= 3.125%

Rounding to one decimal place, we get 3.1%.

Therefore, the closest answer choice is B) 32.1%, which is the complement of the percentage of receivables that are more than 15 days old:

100% - 67.9% = 32.1%.

Use the Following Information for the Question(s)below