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Category > Accounting Posted 11 May 2017 My Price 7.00

RECEIVABLES INVESTMENT

RECEIVABLES 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?

Answers

Alpha Geek
(8)
Status NEW Posted 11 May 2017 12:05 PM My Price 7.00

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file 1494507274-1335221_1_636300417618667641_AR.docx preview (122 words )
3-----------/10----------- me-----------ans----------- if----------- am-----------oun-----------t r-----------eci-----------eve----------- in----------- 10----------- da-----------ys -----------tha-----------n d-----------ebt-----------ors----------- wi-----------ll -----------get----------- 3%----------- di-----------sco-----------unt----------- ot-----------her----------- wi-----------se -----------the-----------y w-----------ill----------- ha-----------ve -----------to -----------pay----------- in----------- 30----------- da-----------ys.----------- A-----------nsw-----------er -----------a. ----------- Da-----------ys -----------sal-----------es -----------Out-----------sta-----------ndi-----------ng -----------= 4-----------0%*----------- 10----------- + -----------60%-----------*40----------- =----------- 28----------- da-----------ys.----------- A-----------nsw-----------er -----------b. ----------- Av-----------era-----------ge -----------amo-----------unt----------- of----------- re-----------cei-----------vab-----------le -----------=da-----------ys -----------sal-----------es -----------out-----------sta-----------ndi-----------ng -----------* p-----------er -----------day----------- sa-----------les-----------. -----------= 2-----------8* -----------912-----------500-----------/36-----------5= -----------70 ----------- An-----------swe-----------r c-----------. -----------Per-----------cen-----------tag-----------e o-----------f c-----------ost----------- of----------- tr-----------ade----------- cr-----------edi-----------t t-----------o c-----------ust-----------ome-----------r w-----------ho -----------are----------- ta-----------kin-----------g d-----------isc-----------oun-----------t= -----------the-----------y w-----------oul-----------d n-----------ot -----------hav-----------e c-----------ost-----------. T-----------hey----------- ar-----------e f-----------ree----------- tr-----------ade----------- cr-----------edi-----------t -----------Ans-----------wer-----------
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