Bulldogs Inc. has a variable cost ratio of 20% and a 10% receivable financing cost. The firm is planning to relax their credit standard. Under the proposed new credit standard, the Investment in accounts receivable is P500,000. Bulldogs also observed that there is an increase of 25% in the carrying cost of accounts receivable from the old credit standard to new credit standard. What is the Accounts receivable balance of Bulldogs Inc. under the old credit standard? *
Q: How much is the temporary current assets needed during the fourth quarter? * , Bulldogs Inc. has a t...
A: Permanent current asset are the asset in which minimum balance are maintained irrespective of circum...
Q: 1. When share options granted vest base on a service condition a. Total fair value of the share opt...
A: Since you have asked multiple questions which are related to each other but have not specified which...
Q: P17.7 (LO 1, 4) (Debt Investment Entries) The following information relates to the debt investments ...
A: Note: Hi! Thank you for the question As per the honor code, We’ll answer the first question since th...
Q: Catalina Corporation begins the year with a $195 balance in Retained Earnings and a $320 balance in ...
A: GIVEN Catalina Corporation begins the year with a $195 balance in Retained Earnings and a $320 bal...
Q: Calculate the fixed cost per unit Production Fixed costs Fixes cost per unit 40 100,000 (1- .) 50 10...
A: Fixed cost per unit = Total fixed cost Number of units produced
Q: Which is false about long-term sources of a firm's capital? * , O All types of corporations may issu...
A: Who can issue equity securities to public:- Only large publicly-held corporation can issue equity se...
Q: Inc. offered a one-year loan to a customer client. The instrument is a discounted note with a nomina...
A: Discount rate of note (R) = 15%
Q: When share appreciation rights are granted to employees expense and liability accounts are recogni...
A: Liability and equity along with assets are presented in the balance sheet of the company that shows ...
Q: Bulldogs Inc., a corporation that issues ordinary shares with par value, completed a 2-for-1 stock s...
A: Legal capital means company's equity portion can not be distribut by dividend or any other means.
Q: Subsidiary Company was merged with Parent Corporation on December 31, 2021. In the business combinat...
A: Retained earnings immediately after the combination is P4,035,000. Explanation:
Q: Catalina Corporation begins the year with a $195 balance in Retained Earnings and a $320 balance in ...
A: Stockholder's equity comprises of common stock and retained earnings balance.
Q: Dow Deep Mining Co acquired mineral rights for S56,000,000. The mineral deposit is estimated at 70,0...
A: Formula: Depletion rate per ton = Mineral rights value / Estimated Tons
Q: • ABC completes the construction in 20x3. The actual total uses the 'cost-to-cost' method in measuri...
A: Calculation of revenue to be recognized till 2002 POC% in 2002= (2.45+1)/4.6 = 75% POC% in 2003= 100...
Q: Dow Deep Mining Co acquired mineral rights for $56,000,000. The mineral deposit is estimated at 70,0...
A: Given that cost of the mineral rights = $56,000,000 Estimated mineral deposit = 70,000,000 tons
Q: The following data refer to Solaris Power Ltd for the financial year ending 31 December 2021: Sales ...
A: Note: Hi! Thank you for the question, As per the honor code, we are allowed to answer three sub-part...
Q: You are getting a mortgage. Your home is worth $237,324, and you will make a $63,651 down payment. Y...
A: Cost of home= $ 237324 Down payment done= $ 63651 Loan= $ 237324- $ 63651 =$ 173673
Q: 8. Goodheart Corp's stock has a required rate of return of 11.50% on its equity, and it sells for P...
A: Solution... Growth rate (g) = 7% Rate of return (Ke) = 11.50% Price (P0) = P25
Q: Anthony's basis in the WAM Partnership interest was $200,000 Just before he received a proportionate...
A: The profit or loss of partner of firm on liquidation will be difference between the basis of the par...
Q: How much is the goodwill on the business combination, assuming both companies qualified as SME?
A: Pearls corporation has acquired net identifiable assets of Start up Company. The net assets and net ...
Q: Chuck, a single taxpayer, earns $76,600 in taxable income and $11,700 in interest from an investment...
A: Marginal tax rate is the rate charged on taxable income for every additional dollar earned. In this ...
Q: It is assumed that the Cost of equity and rate of return are both constant under Walter’s Model of D...
A: Option C is incorrect because when the Cost of Equity and the Rate of Return are both equal then the...
Q: Which of the following statements is TRUE? O The acquirer shall measure the identifiable assets acqu...
A: As per IFRS 3 Acquisition Method shall be used for accounting businees combination. As per the IFRS ...
Q: On January 3, 2022, P Company acquired 70% interest in S Company for P4,200,000. Consideration inclu...
A: Solution Non - controlling interest is an ownership position whereby a shareholder owns less than 5...
Q: On January 3, 2022, P Company acquired 70% interest in S Company for P4,200,000. Consideration inclu...
A: A non-controlling interest, also known as a minority interest, is an ownership position whereby a sh...
Q: Which of the following would best explain an increase in receivables turnover? The company adopt...
A: Receivables turnover is a financial ratio that helps in identifying the ability of the company in co...
Q: The sales and cost data for two companies in the transportation industry are as follows: X Com...
A: Formula: Break even sales value =Fixed cost / Contribution margin ratio
Q: The stock of Payout Corp. will go ex-dividend tomorrow. The dividend will be $1 per share, and there...
A: Dividend is the amount of return on the shares of an entity.
Q: On January 1, 2020, B Company acquired 80% of A Company’s common stock for Php280,000 cash. At that ...
A: Net identifiable assets: Net identifiable assets include both tangible and intangible assets at the ...
Q: ABC Corporation declared 25% bonus issue to its ordinary shareholders on December 31,2021. As
A: Bonus Shares : Bonus shares means additional shares which are given to existing shareholders without...
Q: Allen Inc. took out a 1-year, 8%, $100,000 loan on March 31, 2018. Interest is due upon maturity of ...
A: Interest payable: It refers to the interest that is charged on the loan for the related period of ac...
Q: Questions 4-9 refer to the following balance sheet of a hypothetical private bank called Bank A. You...
A: In the above question, bank A has sold all of its loan worth 100 to bank B at a loss of 20 for which...
Q: Gladstone Company issues 114,000 shares of preferred stock for $38 a share. The stock has fixed annu...
A: Solution.. Number of preferred shares = 114,000 Par value per share = $9 Rate of dividend = 9%
Q: If a company is a multiproduct firm. Group of answer choices
A: Cost Volume Profit analysis is a powerful tool which is used to find ...
Q: The Felton and Burchell Partnership has partner capital account balances as follows: Felton, Capit...
A: Existing Capital = Felton, Capital + Burchell, Capital Total Capital = Existing Capital + New Capita...
Q: Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tap...
A: Activity rate for the material handling cost pool = Total material handling costs / Total no. of mov...
Q: The working capital financing policy that would put a company to the highest level of risk is the on...
A: Introduction:- Working capital play vital role in every business organization. Which are used to ru...
Q: The Chowning Company manufactures ear buds that sell for $20 a pair. The variable cost of each set o...
A: Formula: Total cost = Variable cost + Fixed cost
Q: gross profit variance analysis is most correct?
A: b. All of the choices are correct.
Q: mith Inc. expects to use 96,000 litters of paint annually costing P12 per litter. Inventory carrying...
A: Inventory carrying cost is the cost of keeping items in stock. The larger the volume of inventory, t...
Q: Which of the following is true. The firm's ultimate financial goal is to maximize its net income bec...
A: A firm's ultimate financial goal is following
Q: On April 15, 2019, Powell Inc. obtained a six-month working capital loan from its bank. The face amo...
A: Solution: Face amount of note = $255,400 Interest rate = 5% Period = 6 months
Q: on january 1 2020 paco comapny issued 1800 shares of 5% $105 per cumumlative preferred stock for $22...
A: Note: Hi! Thank you for the question, As per the honor code, we are allowed to answer three sub-part...
Q: Which of the following is correct with regards to cash discounts offering? * Investment in accounts ...
A: Cash discount is given to customers for making instant payments while they purchase goods or avail s...
Q: GBX Corporation acquired 80% of the outstanding shares of UMD Company on June 1, 2017 for P3,517,500...
A: Non-controlling interest includes those shareholders who own less than 50% of the outstanding shares...
Q: Parent Company acquired 75% of outstanding ordinary shares of Subsidiary Company for P900,000. Book ...
A: Workings: 1) Parent company's share in subsidiary company = 75% = 3/4th and Non-controlling interest...
Q: Charleston, Inc. had the following information: Year 2 Year 1 Net Sales 210,000 194,800 ...
A: The Vertical analysis is also known as common size analysis. All the percentage ls are calculated of...
Q: The ABC Partnership shows the following profit and loss ratios and capital balances of its partners:...
A: Solution: When new partner is admitted in partnership, the partnership is reconstituted. There are t...
Q: Sanjay Company has monthly fixed costs of $112,000. The variable costs are $5.00 per unit. The sales...
A: Formula: Sales revenue = Sales units x Sales price per unit
Q: Bulldogs Inc. had credit sales last year amounted to P18,600,000. The firm also had an average accou...
A: Solution.. Credit sales = P18,600,000 Average accounts receivable = P1,380,000 Average collection ...
Q: anuary 1 inventory under FIFO 7,100,000
A: In this question, we have to calculate effect of inventory and retained earning On January 1
Step by step
Solved in 2 steps with 2 images
- Brevard Inc is considering changing its credit terms from net 55 to net 30 to bring its terms in line with other firms in the industry. Currently, annual sales are $2,250,000 and the average collection period (DSO) is 75 days. Brevard Inc. estimates that tightening the credit terms would reduce annaul sales to $2,025,000 but accounts recievable would drop to 39 days of sales. Brevard's variable cost ratio is 59% and its average cost of funds is 11.2%. Should the change in credit terms be made? Assume all operating costs are paid when inverntory is sold and that all sales are collected at the DSO.ALei Industries has credit sales of $146 million a year. ALei's management reviewed its credit policy and decided that it wants to maintain an average collection period of 35 days. a. What is the maximum level of accounts receivable that ALei can carry and have a 35-day average collection period? b. If ALei's current accounts receivable collection period is 55 days, how much would it have to reduce its level of accounts receivable in order to achieve its goal of 35 days?Smith Inc. has sales of P3,000,000. Its credit period and average collection period are both 30 days and 1% of its sales end up as bad debts. The general manager intends to extend the credit period to 45 days which will increase sales by P300,000. However, bad debts losses on the incremental sales would be 3%. Costs of products and related expenses amount to 40% exclusive of the cost of carrying receivables of 15% and bad debts expenses. The change in the credit policy would result to increase (decrease) in incremental profit of (Use 360 days a year)* A. 171k B. 177,750 C. 161,250 D. 106k
- Brown Corporation had average days of sales outstanding of 19 days in the most recent fi scal year. Brown wants to improve its credit policies and collection practices and decrease its collection period in the next fi scal year to match the industry average of 15 days. Credit sales in the most recent fi scal year were $300 million, and Brown expects credit sales to increase to $390 million in the next fi scal year. To achieve Brown’s goal of decreasing the collection period, the change in the average accounts receivable balance that must occur is closest to: C . –$1.22 million.Brown Corporation had average days of sales outstanding of 19 days in the most recent fi scal year. Brown wants to improve its credit policies and collection practices and decrease its collection period in the next fi scal year to match the industry average of 15 days. Credit sales in the most recent fi scal year were $300 million, and Brown expects credit sales to increase to $390 million in the next fi scal year. To achieve Brown’s goal of decreasing the collection period, the change in the average accounts receivable balance that must occur is closest to: A . +$0.41 million.Brown Corporation had average days of sales outstanding of 19 days in the most recent fi scal year. Brown wants to improve its credit policies and collection practices and decrease its collection period in the next fi scal year to match the industry average of 15 days. Credit sales in the most recent fi scal year were $300 million, and Brown expects credit sales to increase to $390 million in the next fi scal year. To achieve Brown’s goal of decreasing the collection period, the change in the average accounts receivable balance that must occur is closest to: B . –$0.41 million.
- Bulldogs Inc. has sales of P3,000,000. Its credit period and average collection period are both 30 days and 1% of its sales end up as bad debts. The general manager intends to extend the credit period to 45 days which will increase sales by P300,000. However, bad debts losses on the incremental sales would be 3%. Costs of products and related expenses amount to 40% exclusive of the cost of carrying receivables of 15% and bad debts expenses. The change in the credit policy would result to increase (decrease) in incremental profit of (Use 360 days a year) P161,250 P171,000 P177,750 P106,000Dome Metals has credit sales of $288,000 yearly with credit terms of net 120 days, which is also the average collection period. Assume the firm adopts new credit terms of 3/18, net 120 and all customers pay on the last day of the discount period. Any reduction in accounts receivable will be used to reduce the firm's bank loan which costs 10 percent. The new credit terms will increase sales by 15% because the 3% discount will make the firm's price competitive. a. If Dome earns 20 percent on sales before discounts, what will be the net change in income if the new credit terms are adopted? (Use a 360-day year.) b. Should the firm offer the discount?Everbusiness Corporation has been reviewing its credit policies. The credit standard it has been applying have resulted in an annual credit sales of $5,000,000.00. Its average collection period is 30 days with a bad debts/loss ratio of 1%. Everbusiness Corporation is considering a reduction in its credit standards. As a result, it expects incremental credit sales of $400,000.00 of which the average collection period would be 60 days, in which the bad BCR to sales for Everbusiness Corporation is 70%. The required investment on receivables is 15%. Evaluate the relaxation in credit standards that Everbusiness Corporation is considering. Use 0.04% per year/365 days. Provide detailed explanation and solutions.
- DoD Ltd has an annual turnover of Tsh.30 million before taking into account bad debts of Tsh.0.2 million. All sales made by the business are on credit, and, at present, credit terms are negotiable by the customer. On average, the settlement period for trade receivables is 60 days. Trade receivables are financed by an overdraft bearing a 15% rate of interest per year. The business is currently reviewing its credit policies to see whether more efficient and profitable methods could be employed. Only one proposal has so far been put forward concerning the management of trade credit. The credit control department has proposed that customers should be given a 2% cash discount if they pay within 30 days. For those who do not pay within this period, a maximum of 45 days’ credit should be given. The credit department believes that 65% of customers will take advantage of the discount by paying at the end of the discount period, and the remainder will pay at the end of 45 days. The credit…Lowe and Price Co has annual credit sales of $12,000,000, and three months are allowed for payment. The company decides to offer a 2% discount for payments made within ten days of the invoice being sent, and to reduce the maximum time allowed for payment to two months. It is estimated that 50% of customers will take the discount. The company requires a 20% return on investments. Assume that the volume of sales will be unaffected by the discount. What is the reduction in accounts receivable? What is the opportunity income from the reduction in accounts receivable? What is the discount allowed each year? What is the net benefit of new discount policy each year?If ABC Corporation has annual credit sales of Ᵽ990,000 and its average accounts receivable is Ᵽ100,000, how many is its average collection period? Assuming that receivable turnover rate increases by 25%, how much would then be the estimated change in accounts receivable.Solution: