Question

Please pretend for a moment that you are the accounts receivable manager for JBX Industries, a local manufacturing company. JBX has the following issues as of 12/31/2017:

1. It is sitting on nearly $1 million in accounts receivable.
2. However, almost $100,000 of that amount is expected to be uncollectible.
3. JBX needs this cash to purchase additional raw materials for its future sales.

What are some ways you could collect on these receivables? What kind of credit policies would you put in place to ensure you only took on the best clients?  

Answer 1

Equated annual payments=Amount due/PVAF at 10% 10 years
	100000/6.1445
	16,275.00
Annual payments is $ 16275
year	payment	interest	Principal payment	principal balance
				100,000.00
1	16,275.00	10,000.00	6,275.00	93,725.00
2	16,275.00	9,372.50	6,902.50	86,822.50
3	16,275.00	8,682.25	7,592.75	79,229.75
4	16,275.00	7,922.98	8,352.03	70,877.73
5	16,275.00	7,087.77	9,187.23	61,690.50
6	16,275.00	6,169.05	10,105.95	51,584.55
7	16,275.00	5,158.45	11,116.55	40,468.00
8	16,275.00	4,046.80	12,228.20	28,239.80
9	16,275.00	2,823.98	13,451.02	14,788.78
10	16,275.00	1,478.88	14,796.12	-                      7.34
Principal note at the end of 7th year is $ 40468.00