FUND.OF CORP.FINANCE-CONNECT+ >CUSTOM<
11th Edition
ISBN: 9781259903496
Author: Ross
Publisher: MCG CUSTOM
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Chapter 20, Problem 4QP
Summary Introduction
To determine: The average accounts receivables.
Introduction:
Accounts receivables are due amounts that should be received from the customers who have bought products from the seller on account or credit.
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Days’ Sales in Receivables [LO2] A company has net income of $218,000, a profi tmargin of 8.70 percent, and an accounts receivable balance of $132,850. Assuming70 percent of sales are on credit, what is the company’s days’ sales in receivables?
Calculating the Average Collection Period [LO2] Ortiz Lumber Yard has acurrent accounts receivable balance of $431,287. Credit sales for the year justended were $3,943,709. What is the receivables turnover? The days’ sales inreceivables? How long did it take on average for credit customers to pay off theiraccounts during the past year?
MULTIPLE CHOICE
Milch Corporation sells on terms of net/90. Their accounts receivable are on average 20 days past due. If annual credit sales are P650,000, what is the company’s average investment in accounts receivable? *A. P168,611.11B. P178,611.11C. P188,611.11D. P244,444.00E. P198,611.11
Chapter 20 Solutions
FUND.OF CORP.FINANCE-CONNECT+ >CUSTOM<
Ch. 20.1 - Prob. 20.1ACQCh. 20.1 - Prob. 20.1BCQCh. 20.2 - What considerations enter into the determination...Ch. 20.2 - Explain what terms of 3/45, net 90 mean. What is...Ch. 20.3 - Prob. 20.3ACQCh. 20.3 - Explain how to estimate the NPV of a credit policy...Ch. 20.4 - What are the carrying costs of granting credit?Ch. 20.4 - What are the opportunity costs of not granting...Ch. 20.4 - Prob. 20.4CCQCh. 20.5 - Prob. 20.5ACQ
Ch. 20.5 - Prob. 20.5BCQCh. 20.6 - Prob. 20.6ACQCh. 20.6 - What is an aging schedule?Ch. 20.7 - What are the different types of inventory?Ch. 20.7 - What are three things to remember when examining...Ch. 20.7 - Prob. 20.7CCQCh. 20.8 - Prob. 20.8ACQCh. 20.8 - Which cost component of the EOQ model does JIT...Ch. 20.A - Prob. 1ACQCh. 20.A - Prob. 1BCQCh. 20.A - Evaluating Credit Policy [LO2] Bismark Co. is in...Ch. 20.A - Credit Policy Evaluation [LO2] The Johnson Company...Ch. 20.A - Prob. 3QPCh. 20.A - Prob. 4QPCh. 20.A - Prob. 5QPCh. 20 - What is the difference between the accounts...Ch. 20 - Prob. 20.2CTFCh. 20 - Prob. 20.7CTFCh. 20 - Prob. 1CRCTCh. 20 - Prob. 2CRCTCh. 20 - Prob. 3CRCTCh. 20 - Five Cs of Credit [LO1] What are the five Cs of...Ch. 20 - Prob. 5CRCTCh. 20 - Prob. 6CRCTCh. 20 - Prob. 7CRCTCh. 20 - Prob. 8CRCTCh. 20 - Prob. 9CRCTCh. 20 - Prob. 10CRCTCh. 20 - Prob. 1QPCh. 20 - Size of Accounts Receivable [LO1] The Red Zeppelin...Ch. 20 - Prob. 3QPCh. 20 - Prob. 4QPCh. 20 - Terms of Sale [LO1] A firm offers terms of 1/10,...Ch. 20 - Prob. 6QPCh. 20 - Prob. 7QPCh. 20 - Prob. 8QPCh. 20 - Evaluating Credit Policy [LO2] Air Spares is a...Ch. 20 - Prob. 10QPCh. 20 - Prob. 11QPCh. 20 - Prob. 12QPCh. 20 - Prob. 13QPCh. 20 - Prob. 14QPCh. 20 - Prob. 15QPCh. 20 - Prob. 16QPCh. 20 - Prob. 17QPCh. 20 - Prob. 18QPCh. 20 - Prob. 19QPCh. 20 - Prob. 20QPCh. 20 - Prob. 21QPCh. 20 - Prob. 22QPCh. 20 - Credit Policy at Howlett Industries Sterling...Ch. 20 - Prob. 2M
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- Q35 Dyl Pickle Inc. had credit sales of $15,700,000 last year and its days sales outstanding was DSO = 55 days. What was its average receivables balance, based on a 365-day year? $2,365,753 $1,041,909 $285,455 $2,804,795 $1,294,521arrow_forwardRECEIVABLES INVESTMENT McDowell Industries sells on terms of 3 10, net 30. Total sales for the year are $912,500; 40% of the customers pay on the 10th day and take discounts, while the other 60% pay, on average, 40 days after their purchases.a. What is the days sales outstanding?b. What is the average amount of receivables?c. What is the percentage cost of trade credit to customers who take the discount?d. What is the percentage cost of trade credit to customers who do not take the discount and pay in 40 days?e. What would happen to McDowell’s accounts receivable if it toughened up on its collection policy with the result that all nondiscount customers paid on the 30th day?arrow_forwardThe QYU, Inc. has sales of P5 million per year (all credit) and an average collection period of 35 days. What is its average amount of accounts receivable outstanding? P479,452 C. P150,000 P142,857 D. P500,000arrow_forward
- Salma Corporation sells on terms of net/90. Their accounts receivable are on average 20 days past due. If annual credit sales are P800,000, what is the company’s average investment in accounts receivable? choose the letter of correct answera. P44,444.00b. P144,444.00c. P224,444.00d. P244,444.00e. P344,444.00arrow_forward6. Michaels Corp. has a current accounts receivable balance of $623,410. Credit sales for the year just ended were $5,410,695. What is the receivables turnover? The days’ sales in receivables? How long did it take on average for credit customers to pay off their accounts during the past year?arrow_forward4. KK Co. normally takes 30 days to pay for its average daily credit purchases of P2,000. Its average daily sales are P3,000, and it collects accounts in 25 days. What is its net credit position? (Note that a negative position impliesreceivables exceed payables.) A. P1,000 C. P15,000B. (P1,000) D. (P15,000)arrow_forward
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- Q4 : ( A ) Assume that The average monthly sales of company ( x ) is $ ( 45000 ) and The average monthly receivable account is $ ( 10000 ) Days , sales outstanding Find the days , sales outstandingarrow_forwardPlease Solve This Question 1. Medwing Corporation has a DSO of 19 days. The company averages 5,500 in credit sales each day. What is the company’s average accounts receivable?arrow_forwardThis year your company has $34 million of credit sales and average receivables of $7 million. Your company factor receivables by discounting 1%. What is the APR of factoring the receivables? A 1.00% B 1.01% C 4.80% D 4.91% E 5.00%arrow_forward
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