5) Use Table 1. What is the accounts receivable turnover? Credit Sales Uncollected Amount January $100,000...

5) Use Table 1. What is the accounts receivable turnover?

	Credit Sales	Uncollected Amount
January	$100,000	$10,000
February	125,000	15,000
March	150,000	25,000
April	175,000	60,000

a) 4.58 times b) 5 times c) 5.75 times d) 6.44 times e) 7.44 times

6) George Gonzalez is evaluating a proposal to extend credit to a group of new customers. The new customers will generate an average of $45,000 per day in new sales. On average, they will pay in 75 days. The variable cost ratio is 75%, collection expenses are 5% of sales, and the cost of capital is 11%. What is the NPV of one day's sales if George grants credit? Assume that there is no bad debt loss.

a) $9,288.77 b) $8,820.19 c) $8,055.09 d)$7,385.44 e) $6,246.46

13) Credit analyst John Adams is considering a $1,000 order from a new customer. The variable cost of filling the order is 75% of sales. John estimates collection costs are 5% of sales. The customer will pay in 45 days. If the appropriate cost of capital is 10%, what is the NPV of extending credit to the new customer?

a) $339.44 b) $282.65 c) $251.89 d)188.43 e) $166.94

14) The XYZ Company has annual average purchases of $275,000 and an ending accounts payable balance of $20,000. How long, on average does XYZ take to payfor its purchases?

a) 66.36 days b) 59.73 days c) 51.10 days d) 36.60 days e) 26.55 days

Expert Solution

Solution A
	Sale	Uncollected
January	100,000	10,000
February	125,000	15,000
March	150,000	25,000
April	175,000	60,000
	550,000	110,000

AR turnover=	Credit Sale/Uncollected

AR turnover=	550000/110000
AR turnover=	5.00
So option B is correct

Solution B

Sale revenue	45,000
Less collection expense	5.00%	45000*5%
Net Sale revenue	42,750
PV of sale revenue	42750/(1+11%*75/365)
PV of sale revenue	41,805.09
Variable cost-45000*75%	(33,750.00)
NPV	8,055.09

So option C is correct

Solution C

Sale revenue	1,000
Less collection expense	5.00%	1000*5%
Net Sale revenue	950
PV of sale revenue	950/(1+10%*45/365)
PV of sale revenue	938
Variable cost-1000*75%	(750.00)
NPV	188.43

So option D is correct

Solution d

Annual Purchase	275,000
Ending Accounts payable	20,000

AP turnover	275000/20000
AP turnover	13.75

Days required	365/13.75
Days required	26.55

So option E is correct

jeff jeffy answered 2 years ago

The accounts receivable turnover ratio of a company is 2; if its annual credit sales is...

The accounts receivable turnover ratio of a company is 2; if its annual credit sales is $ 951810, what is the average value of outstanding credit (or value of accounts receivable)? If the company operates 350 a year, what is the average number of days it takes to get a credit sale paid? Average outstanding credit = $ . (Round to TWO places of decimal) Average number of days to get payment on a credit sale = (Round to the nearest integer)

1. Define the accounts receivable turnover and the days sales outstanding ratios. What do these ratios...

1. Define the accounts receivable turnover and the days sales outstanding ratios. What do these ratios tell us about a company’s accounts receivable? 2. What effect, if any, does a strengthening of the dollar have on reported sales and net income for companies operating outside the United States, when those foreign operations are translated to U.S. dollars for consolidation purposes? 3. How do companies test assets for impairment? If an asset is impaired, how do companies write them down? 4....

What effect does a sale on credit have on the following accounts Accounts Receivable, Sales Revenue,...

What effect does a sale on credit have on the following accounts Accounts Receivable, Sales Revenue, Cost of Goods Sold, and Inventory ? Does each account increase or decrease ?

1. ABC Corporation currently has an Inventory Turnover of 13.99, an Accounts Receivable Turnover of 24.52,...

1. ABC Corporation currently has an Inventory Turnover of 13.99, an Accounts Receivable Turnover of 24.52, and an Accounts Payable Turnover of 19. How many days are in the operating cycle? 2. Indicate the effect of the following on the cash cycle: Accounts Receivable Period (AR Period) goes up Note: AR Period is also called as the Average Collection Period Group of answer choices * No change * Increase * Decrease

On January 1, ABC Company had $190,000 in Accounts Receivable and during the month had Credit...

On January 1, ABC Company had $190,000 in Accounts Receivable and during the month had Credit sales of $370,000 and Cash sales of $200,000. During January, ABC collected $310,000 on account and wrote off a $12,000 receivable. Also, during January, ABC had Sales Allowances of $9,000; Sales Discounts of $16,000; and Sales Returns of $17,500. ABC managed to collect $3,800 of a previously written off account during January. The balance in the Allowance for Uncollectible Accounts on January 1 was...

On January 1, 2019, Big Red, Inc. had gross accounts receivable of $450,000 and a credit...

On January 1, 2019, Big Red, Inc. had gross accounts receivable of $450,000 and a credit balance in the allowance for doubtful accounts of $52,500. During 2019 the following activity occurred: Sales made on credit totaled $6,500,000 Cash collections on credit sales totaled $6,618,000 Account balances written off: $74,000. On December 28, 2019, $27,000 previously written off was collected. Big Red, Inc. uses the Percentage of credit sales method to account for bad debt. Required: 1. Prepare the journal entries...

Accounts receivable turnover and days’ sales in receivables For two recent years, Robinhood Company reported the...

Accounts receivable turnover and days’ sales in receivables For two recent years, Robinhood Company reported the following: 20Y9 20Y8 Sales $7,357,500 $6,195,000 Accounts receivable: Beginning of year 550,000 500,000 End of year 540,000 550,000 a. Determine the accounts receivable turnover for 20Y9 and 20Y8. Round answers to one decimal place. 20Y8: 20Y9: b. Determine the days’ sales in receivables for 20Y9 and 20Y8. Use 365 days and round all calculations to one decimal place. 20Y8: days 20Y9: days c. Are the changes...

(ACCOUNTS RECEIVABLE) The following data about Zeta Company’s accounts related with credit sales are available for...

(ACCOUNTS RECEIVABLE) The following data about Zeta Company’s accounts related with credit sales are available for 2019. “Net Sales” during 2019 (all on credit) 750,000 TL “Accounts Receivables”, on 1.1.2019 45,000 TL “Allowance For Uncollectible Accounts”, on 1.1.2019 10,000 TL (Credit) Collection of accounts receivables during 2019 580,000 TL Customer accounts written off as uncollectible during 2019 2,000 TL *Assuming that Zeta Company provides for doubtful accounts based on %4 of the credit sales. Required: a) Make the relating adjusting...

What amount does a company expect to collect from Accounts Receivable? A) gross amount of Accounts...

What amount does a company expect to collect from Accounts Receivable? A) gross amount of Accounts Receivable B) net realizable value of Accounts Receivable C) gross amount of Accounts Receivable minus Allowance for Uncollectible Accounts D) B and C Emma Jones Company has the following information available: Account 12/31/2019 12/31/2018 Accounts Payable $76,500 $80,000 Accounts Receivable, net 42,300 49,000 Cash and Cash Equivalents 43,700 70,000 Inventories 100,000 99,000 Long-Term Investments 20,000 100,000 Short-Term Investments 27,000 44,000 Income Taxes Payable 2,000...

American Laser, Inc., reported the following account balances on January 1. Debit Credit Accounts Receivable $...

American Laser, Inc., reported the following account balances on January 1. Debit Credit Accounts Receivable $ 5,000 Accumulated Depreciation $ 30,000 Additional Paid-in Capital 122,000 Allowance for Doubtful Accounts 2,000 Bonds Payable 0 Buildings 279,000 Cash 18,000 Common Stock, 10,000 shares of $1 par 10,000 Notes Payable (long-term) 18,000 Retained Earnings 120,000 Treasury Stock 0 TOTALS $ 302,000 $ 302,000 The company entered into the following transactions during the year. Jan. 15 Issued 21,000 shares of $1 par common stock...

Question