The manager of the Bank of Mount Royal just phoned Daniel and offered the company same-day deposit for their cheques; this will reduce their availability float to one business day. The fee for this service will be $3,000 per year. Nathan and Daniel must decide whether this is a good deal or not. At the end of the business week, the partners ordered a large pizza and went to Nathan’s place to hash out their decision. They came up with the following list of questions: What will be the net float if Nathan Daniel takes up the Bank of Mount Royal’s offer for same-day deposit of their cheques? How much additional cash will be made available if the company takes up the Bank of Mount Royal’s offer for same-day deposit of their cheques? (Assume that on average, sales will remain at $3,500,000 each year.) How much does the company have to borrow from its bank to cover net float if they accept the bank’s same-day deposit offer? 11 Should the partners accept the same-day deposit offer from its bank?
The manager of the Bank of Mount Royal just phoned Daniel and offered the company same-day deposit for their cheques; this will reduce their availability float to one business day. The fee for this service will be $3,000 per year. Nathan and Daniel must decide whether this is a good deal or not. At the end of the business week, the partners ordered a large pizza and went to Nathan’s place to hash out their decision. They came up with the following list of questions: What will be the net float if Nathan Daniel takes up the Bank of Mount Royal’s offer for same-day deposit of their cheques? How much additional cash will be made available if the company takes up the Bank of Mount Royal’s offer for same-day deposit of their cheques? (Assume that on average, sales will remain at $3,500,000 each year.) How much does the company have to borrow from its bank to cover net float if they accept the bank’s same-day deposit offer? 11 Should the partners accept the same-day deposit offer from its bank?
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter2: Basic Accounting Systems: Cash Basis
Section: Chapter Questions
Problem 2.1.1C: Business emphasis Assume that you are considering developing a nationwide chain of women’s clothing...
Related questions
Question
The manager of the Bank of Mount Royal just phoned Daniel and offered the company same-day deposit for their cheques; this will reduce their availability float to one business day. The fee for this service will be $3,000 per year.
Nathan and Daniel must decide whether this is a good deal or not. At the end of the business week, the partners ordered a large pizza and went to Nathan’s place to hash out their decision. They came up with the following list of questions:
- What will be the net float if Nathan Daniel takes up the Bank of Mount Royal’s offer for same-day deposit of their cheques?
- How much additional cash will be made available if the company takes up the Bank of Mount Royal’s offer for same-day deposit of their cheques? (Assume that on average, sales will remain at $3,500,000 each year.)
- How much does the company have to borrow from its bank to cover net float if they accept the bank’s same-day deposit offer?
11 Should the partners accept the same-day deposit offer from its bank?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning