A credit manager who is concerned about a client's viability might take all of the following steps except for thefollowing:O require monthly billing termsO require the client post a letter of creditO require COD termsO require CBD temsQuestion 4The Treasurer of a corporation is negotiating with one of his / her suppliers to allow the corporation to have 30days to pay supplier's invoices. The Treasurer is arranging:O cash discount termsO Short term financingO commercial paperO a factoring of receivables

Credit manager works for the management of credit on client behalf. Normally responsible for credit…

A credit manager who is concerned about a client's viability might take all of the following steps except for the following: require monthly billing terms require the client post a letter of credit O require COD terms O require CBD tems

A credit manager who is concerned about a client's viability might take all of the following steps except for the following: require monthly billing terms require the client post a letter of credit O require COD terms O require CBD tems

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 26Q: A customer was unable to pay the accounts receivable on time in the amount of $34,000. The customer...

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A customer was unable to pay the accounts receivable on time in the amount of $34,000. The customer was able to negotiate with the company and transferred the accounts receivable into a note that includes interest, along with an up-front cash payment of $6,000. The note maturity date is 24 months with a 15% annual interest rate. What is the entry to recognize this transfer?
Hussein Al Lawati SAOG has recognized that the organization is facing a liquidity crisis. Accordingly, the accountant of the organization has studied the payment records from the customer and has noticed that the company at present offers its customers 25 days credit. Half the customers by value, pay on time. The other half takes an average of 50 days to pay. In this background you are planning to offer a cash discount of 2.5 per cent to your customers for the payment made within 25 days. The credit controller anticipates that half of the customers who now take an average of 50 days to pay will pay in 25 days. The other half will still take an average of 50 days to pay. It is anticipated that the proposed scheme will reduce bad debts amount by RO. 450,000 a year. Annual sales revenue of RO 45,000,000 is made evenly throughout the year. At present the business has a large overdraft RO. 5,000,000 with its bank at an interest of 7 percent a year. Required: a. Calculate receivables…
Hussein Al Lawati SAOG has recognized that the organization is facing a liquidity crisis. Accordingly, the accountant of the organization has studied the payment records from the customer and has noticed that the company at present offers its customers 25 days credit. Half the customers by value, pay on time. The other half takes an average of 50 days to pay. In this background you are planning to offer a cash discount of 2.5 per cent to your customers for the payment made within 25 days. The credit controller anticipates that half of the customers who now take an average of 50 days to pay will pay in 25 days. The other half will still take an average of 50 days to pay. It is anticipated that the proposed scheme will reduce bad debts amount by RO. 450,000 a year. Annual sales revenue of RO 45,000,000 is made evenly throughout the year. At present the business has a large overdraft RO. 5,000,000 with its bank at an interest of 7 percent a year. Required: How much is the Net cost of…
As the accountant for Clean Air Controls, you attend a meeting with the sales managers to discuss credit policies. At the meeting, you report that bad debts expense for the year is estimated to be $85,000 and account receivables at year end is $1,500,000 less a $57,000 allowance for doubtful accounts. Arthur Levitt, a sales manager, asks why bad debts expense and the allowance are not the same amount. Required 1. Write a professional email explaining this concept to Arthur. The company estimates bad debts expense as 3% of sales.
Springer Products wishes to borrow $90,000 from a local bank using its accounts receivable to secure the loan. The bank's policy is to accept as collateral any accounts that are normally paid within 30 days of the end of the credit period, as long as the average age of the account is not greater than the customer's average payment period. Springer's accounts receivable, their average ages, and the average payment period for each customer are shown in the following table: Customer Accounts Receivable Average age of account Average payment period of customer A $11,000 42 days 50 days B $25,000 70 days 65 days C $10,000 48 days 45 days D $28,000 55 days 50 days E $14,000 50 days 60 days F $19,000 21 days 35 days G $30,000 10 days 30 days H $16,000 25 days 40 days…
The following are excerpts from the financial statements of 2018 and 2019 of Mandela Corporation. 2019 2018 Sales $187,600 $195,000 Accounts Receivable (net): Beginning of Year 68,100 66,500 End of Year 60,200 68,100 A newly hired manager has started implementing new credit policies. Required: a. As a consultant, you are contracted to analyze Accounts Receivable Turnover and Number of Days’ Sales in Receivable and provide opinion as to whether Mandela’s credit policy changes are working b. What conclusions does your analysis suggest. Are the new credit policies working?
As the accountant for Pure-Air Distributing, you attend a sales managers’ meeting devoted to a discussion of credit policies. At the meeting, you report that bad debts expense is estimated to be $59,000 and accounts receivable at year-end amount to $1,750,000 less a $43,000 allowance for doubtful accounts. Sid Omar, a sales manager, expresses confusion over why bad debts expense and the allowance for doubtful accounts are different amounts. Write a one-page memorandum to him explaining why a difference in bad debts expense and the allowance for doubtful accounts is not unusual. The company estimates bad debts expense as 2% of sales.
Analyze each situation given below and indicate which type of receivable it produces. (Choose one of the options provided in the drop down menu). - A company paid the salary to one of its employees in advance, at the beginning of the month { notes receivable, other receivable, accounts receivable, no receivable}. - A merchandies company sold goods to a customer abd cash was received one month before the items delivery { notes receivable, other receivable, accounts receivable, no receivable}. - A service company performed a service for a customer and cash was received one week before the service { notes receivable, other receivable, accounts receivable, no receivable}. - A merchandise company sold goods to a customer and cash was received at items delivery { notes receivable, other receivable, accounts receivable, no receivable}. - A service company performed a service for a customer and cash was received immediately after the service { notes receivable, other receivable, accounts…
Heirloom needs to borrow from a local bank for corporate short-term operating purposes. It is willing to pledge unpaid contracts as collateral for a loan. A local bank president is willing to lend Heirloom up to 70% of the value of notes receivable that are not more than 60 days overdue. Heirloom must also provide, by the fifth day of each month, a note receivable aging list for the preceding month and a calculation showing the maximum amount Heirloom may borrow under the agreement. Figure 5-3 shows the employees and external parties that deal with Heirloom. Explain how Heirloom could defraud the bank and how each internal and external party, except the bank, could defraud Heirloom. What risk factor, unusual item, or abnormality would alert you to each fraud? What control weaknesses make each fraud possible? Recommend one or more controls to prevent or detect each means of committing fraud.
Your supervisor tells you to change the aging category of a large account from account receivables from over 120 days to current status and prepare a new invoice to the customer with the revised date that agrees with this new category. this will change the required allowance of uncollectible accounts from $180,000 to $135,000. what is the ethical dilemma the assistant controller faces?what are the ethical considerations? consider the options and responsibilities as the assistant controller
Natalie decides that she cannot afford to hire John to do her accounting. One way that she can ensure that her cash account does not have any errors and is accurate and up-to-date is to prepare a bank reconciliation at the end of each month.Natalie would like you to help her. She asks you to prepare a bank reconciliation for June 2021 using the following information. GENERAL LEDGER—COOKIE CREATIONS INC. Cash Date Explanation Ref Debit Credit Balance 2021 June 1 Balance 2,657 1 750 3,407 3 Check #600 625 2,782 3 Check #601 95 2,687 8 Check #602 56 2,631 9 1,050 3,681 13 Check #603 425 3,256 20 155 3,411 28 Check #604 297 3,114 28 110 3,224 PREMIER BANKStatement of Account—Cookie Creations Inc.June 30, 2021 Date Explanation Checks and…
Chung Limited is applying for additional bank overdraft finance to enable the company to make the plant and machinery purchase described below. The directors have has asked you to draw up a cash budget for the 6 months to 30 June 2020 to prove to the bank that that overdraft finance will be repaid by 30 June 2020. The company provides you with the following financial information: Month Sales Purchases Wages Overheads £ £ £ £ November 2019 (actual) 45,800 18,400 9,600 6,000 December 2019 (actual) 34,600 13,900 9,800 14,000 January 2020 (budgeted) 42,200 16,800 10,500 7,000 February 2020 (budgeted) 44,000 17,600 11,200 7,500 March 2020 (budgeted) 54,000 21,600 13,500 18,800 April 2020 (budgeted) 57,600 23,000 14,400 8,000 May 2020 (budgeted) 61,800 24,700 15,300 9,200 June 2020 (budgeted) 63,700 25,500 15,900 9,800 Notes: The bank balance at 1 January 2020…