Cash sales $135,000 Credit sales 512,000 Accounts receivable determined to be uncollectible 9,650 The firm's estimated rate for bad debts is 2.2% of credit sales. Question 1: Conceptual Connection: If Gilmore's estimate of bad debts is correct (2.2% of credit sales) and the gross margin is 20%, by how much did Gilmore's income from operations increase assuming $150,000 of the sales would have been lost if credit sales were not offered? Question 2: On November 30, 2019, Tucker Products performed computer programming services for Thomas Inc. in exchange for a 5-month, $125,000, 9% note receivable. Thomas paid Tucker the full amount of interest and principal on April 30, 2020. Dec. 31, 2019 Interest Receivable ? Interest Income ? Apr. 30, 2020 Cash ? Notes Receivable ? Interest Receivable ? Interest Income
Cash sales $135,000 Credit sales 512,000 Accounts receivable determined to be uncollectible 9,650 The firm's estimated rate for bad debts is 2.2% of credit sales. Question 1: Conceptual Connection: If Gilmore's estimate of bad debts is correct (2.2% of credit sales) and the gross margin is 20%, by how much did Gilmore's income from operations increase assuming $150,000 of the sales would have been lost if credit sales were not offered? Question 2: On November 30, 2019, Tucker Products performed computer programming services for Thomas Inc. in exchange for a 5-month, $125,000, 9% note receivable. Thomas paid Tucker the full amount of interest and principal on April 30, 2020. Dec. 31, 2019 Interest Receivable ? Interest Income ? Apr. 30, 2020 Cash ? Notes Receivable ? Interest Receivable ? Interest Income
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter22: Providing And Obtaining Credit
Section: Chapter Questions
Problem 5P: Relaxing Collection Efforts The Boyd Corporation has annual credit sales of 1.6 million. Current...
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100%
| Cash sales | $135,000 |
| Credit sales | 512,000 |
| Accounts receivable determined to be uncollectible | 9,650 |
The firm's estimated rate for
Question 1: Conceptual Connection: If Gilmore's estimate of bad debts is correct (2.2% of credit sales) and the gross margin is 20%, by how much did Gilmore's income from operations increase assuming $150,000 of the sales would have been lost if credit sales were not offered?
Question 2: On November 30, 2019, Tucker Products performed computer programming services for Thomas Inc. in exchange for a 5-month, $125,000, 9% note receivable. Thomas paid Tucker the full amount of interest and principal on April 30, 2020.
| Dec. 31, 2019 | Interest Receivable | ? | |
| Interest Income | ? | ||
| Apr. 30, 2020 | Cash | ? | |
| Notes Receivable | ? | ||
| Interest Receivable | ? | ||
| Interest Income |
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