What are the accounting implications and costs are involved

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Reference no: EM13914617

Mitsubishi Corp., a broadly diversified Japanese company, instituted a credit plan called Three Diamonds for customers who buy its major electronic products, such as large-screen televisions, from specified retail dealers.13 Under the plan, approved customers who make purchases in July of one year do not have to make any payments until September of the next year. Nor do they have to pay interest during the intervening months. Mitsubishi pays the dealer the full amount less a small fee, sends the customer a Mitsubishi credit card, and collects from the customer at the specified time. What was Mitsubishi's motivation for establishing such generous credit terms? What costs are involved? What are the accounting implications?

Reference no: EM13914617

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