Chapter 6 Accounting


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 10-day discount period if it must draw on its line of credit (borrow from Northern Bank) to make these early payments?  Explain?


  1. Describe the operating cycle of a merchandising company. 
  2. Compare and contrast the merchandising activities of a wholesaler and a retailer.
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