You carry over a balance of $400 on a recent purchase of a washing machine, you will just pay the minimum payment each month for the next three months. The APR is 15.99% and the minimum payment each month is 4% of the balance. Determine the finance charge, new balance, and minimum payment required for the first month, and the starting balance for month 2 in the table below (round to the nearest cent, do not include units with your answers):

You carry over a balance of $400 on a recent purchase of a washing machine, you will just pay the minimum payment each month for the next three months. The APR is 15.99% and the minimum payment each month is 4% of the balance. Determine the finance charge, new balance, and minimum payment required for the first month, and the starting balance for month 2 in the table below (round to the nearest cent, do not include units with your answers):

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 3Q: On January 1, a flower shop contracts with customers to provide flowers for their wedding on June 2....

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Scrimiger Paints wants to upgrade its machinery and on September 20 takes out a loan from the bank in the amount of $500,000. The terms of the loan are 2.9% annual interest rate and payable in 8 months. Interest is due in equal payments each month. Compute the interest expense due each month. Show the journal entry to recognize the interest payment on October 20, and the entry for payment of the short-term note and final interest payment on May 20. Round to the nearest cent if required.
Whole Leaves wants to upgrade their equipment, and on January 24 the company takes out a loan from the bank in the amount of $310,000. The terms of the loan are 6.5% annual interest rate, payable in three months. Interest is due in equal payments each month. Compute the interest expense due each month. Show the journal entry to recognize the interest payment on February 24, and the entry for payment of the short-term note and final interest payment on April 24. Round to the nearest cent if required.
On January 1, a flower shop contracts with customers to provide flowers for their wedding on June 2. The total contract price is $3,000, payable in equal installments for the next six months on the first of each month (with the first payment due January 1). How much will be recorded as revenue during the month of April?
Able Transport operates a tour bus that they lease with terms that involve a fixed fee each month plus a charge for each mile driven. Able Transport drove the bus 7,000 miles and paid a total of $1,360 in June. In October. Able Transport paid $1,280 for the 5,000 miles driven. If Able Transport uses the high-low method to analyze costs, how much would Able Transport pay in December, if they drove 6,000 miles?
Now assume that it is several years later. The brothers are concerned about the firm’s current credit terms of net 30, which means that contractors buying building products from the firm are not offered a discount and are supposed to pay the full amount in 30 days. Gross sales are now running $1,000,000 a year, and 80% (by dollar volume) of the firm’s paying customers generally pay the full amount on Day 30; the other 20% pay, on average, on Day 40. Of the firm’s gross sales, 2% ends up as bad-debt losses. The brothers are now considering a change in the firm’s credit policy. The change would entail: (1) changing the credit terms to 2/10, net 20, (2) employing stricter credit standards before granting credit, and (3) enforcing collections with greater vigor than in the past. Thus, cash customers and those paying within 10 days would receive a 2% discount, but all others would have to pay the full amount after only 20 days. The brothers believe the discount would both attract additional customers and encourage some existing customers to purchase more from the firm—after all, the discount amounts to a price reduction. Of course, these customers would take the discount and hence would pay in only 10 days. The net expected result is for sales to increase to $1,100,000; for 60% of the paying customers to take the discount and pay on the 10th day; for 30% to pay the full amount on Day 20; for 10% to pay late on Day 30; and for bad-debt losses to fall from 2% to 1% of gross sales. The firm’s operating cost ratio will remain unchanged at 75%, and its cost of carrying receivables will remain unchanged at 12%. To begin the analysis, describe the four variables that make up a firm’s credit policy and explain how each of them affects sales and collections.
You carry over a balance of $500 on a recent purchase of a new refridgerator, you will just pay the minimum payment each month for the next three months. The APR is 18.99% and the minimum payment each month is 4% of the balance. Determine the finance charge, new balance, and minimum payment required for the first month, and the starting balance for month 2 in the table below (round to the nearest cent, do not include units with you answers): Month Carry-over balance Finance charge New balance Minimum payment 1 $500 2
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You have a carry-over balance of $450 of credit card charges with no additional charges and you plan to just pay the minimum payment each month for the next two months. The Annual Percentage Rate (APR) is 15.99% and the minimum payment each month is 4% of the balance. Determine the finance charge, new balance, and minimum payment required for each of the next two months, and the carry over balance for month 3 in the table below: (round all answers to the nearest cent) Month Carry over Balance Finance charge new balance minium payment 1 450.00 2 3
You’re prepared to make monthly payments of $225, beginning at the end of this month, into an account that pays an APR of 6.5 percent compounded monthly. How many payments will you have made when your account balance reaches $15,000? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
You’re prepared to make monthly payments of $265, beginning at the end of this month, into an account that pays 9 percent interest compounded monthly. How many payments will you have made when your account balance reaches $68,000? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
25% of the price of a living room furniture is paid with a document with a face value of $4,000 and expiration in 30 days. 30% is settled through a payment within 60 days, another 30% with a document within 90 days of the purchase and the remaining 15% is left as an advance payment. Obtain a) The price of the furniture. b) The advance payment and the other two payments. c) The total interest charge. Assume that the furniture store charges 22.20% annually compounded by months on its credit sales.