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The following is an excerpt from a conversation between Brad Hass and Terry Mann. Brad is debating whether to buy a stereo system from Radiant Sound, a locally owned electronics store, or Audio Pro Electronics, a mail-order electronics company.

Brad: Terry, I don't know what to do about buying my new stereo.

Terry: What's the problem?

Brad: Well, I can buy it locally at Radiant Sound for $395.00. However, Audio Pro Electronics has the same system listed for $399.99.

Terry: So what's the big deal? Buy it from Radiant Sound.

Brad: It's not quite that simple. Audio Pro said something about not having to pay sales tax, since I was out-of-state.

Terry: Yes, that's a good point. If you buy it at Radiant Sound, they'll charge you 6% sales tax.

Brad: But Audio Pro Electronics charges $12.50 for shipping and handling. If I have them send it next-day air, it'll cost $25 for shipping and handling.

Terry: I guess it is a little confusing.

Brad: That's not all. Radiant Sound will give an additional 1% discount if I pay cash.

Otherwise, they will let me use my MasterCard, or I can pay it off in three monthly installments.

Terry: Anything else???

Brad: Well . . . Audio Pro says I have to charge it on my MasterCard. They don't accept checks.

Terry: I am not surprised. Many mail-order houses don't accept checks.

Brad: I give up. What would you do?

1. Assuming that Audio Pro Electronics doesn't charge sales tax on the sale to Brad, which company is offering the best buy?

2. What might be some considerations other than price that might influence Brad's decision on where to buy the stereo system?

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M91573600

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