Question
In: Finance
Float Simon Corporation has daily cash receipts of $61,000. A recent analysis of its collections indicated...
Float Simon Corporation has daily cash receipts of $61,000. A recent analysis of its collections indicated that customers' payments were in the mail an average of 3 days. Once received, the payments are processed in 2.5 days. After payments are deposited, it takes an average of 2 days for these receipts to clear the banking system.
a. How much collection float (in days) does the firm currently have?
b. If the firm's opportunity cost is 8%, would it be economically advisable for the firm to pay an annual fee of $17,500 for a lockbox system to reduce collection float by 4 days?
c. What would the company's opportunity cost have to be to make the $17,500 fee worthwhile?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
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LockUp Corporation has the following items in the Petty Cash and Cash Collections combined as of...
LockUp Corporation has the following items in the Petty Cash and
Cash Collections combined as of as of January 5, 2020 during the
checking of Cash for December 31, 2019 balance sheet.
a. Bills and Coins
Denomination
Bundle of 100 pcs
Rolls of 50 coins
Loose
P 500
1
9
100
2
27
50
3
5
20
5
4
10
10
5
6
4
1
10
20
.25
40
16
b. Checks
Maker
Payee
Date
Amount
Baran - Customer
LockUp
12/30/2019
P...
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LENZ-SIMON CASTINGS CORPORATION CASE ANALYSIS
Cydney Lenz, CFO of Lenz-Simon Corporation (LSC) is considering the
purchase of an Aspen automated mold-maker machine to replace six
existing semi-automated molding machines. The Aspen mold-maker
machine is expected to improve the quality of LSC precision metal
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Cydney plans to carefully estimate the project’s benefits and costs
in order to make a recommendation to the LSC Board of Directors on
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LENZ-SIMON CASTINGS CORPORATION CASE ANALYSIS Cydney Lenz, CFO of Lenz-Simon Corporation (LSC) is considering the purchase...
LENZ-SIMON CASTINGS CORPORATION CASE ANALYSIS Cydney Lenz, CFO
of Lenz-Simon Corporation (LSC) is considering the purchase of an
Aspen automated mold-maker machine to replace six existing
semi-automated molding machines. The Aspen mold-maker machine is
expected to improve the quality of LSC precision metal castings and
to provide additional capacity for future expansion. Cydney plans
to carefully estimate the project’s benefits and costs in order to
make a recommendation to the LSC Board of Directors on whether to
proceed with the...
A new audit client of your processes its sales and cash receipts and cash receipts documents...
A new audit client of your processes its sales and cash receipts
and cash receipts documents in the following manner: Cash Receipts
The mail is opened each morning by a mail clerk in the sales
department. The mail clerk prepares a remittance advice (showing
customer and amount paid) if one is not received. The cheque and
remittance advices are then forwarded to the sales department
supervisor, who reviews each cheque and forwards the cheque and
remittance advices to the accounting...
A new audit client of your processes its sales and cash receipts and cash receipts documents...
A
new audit client of your processes its sales and cash receipts and
cash receipts documents in the following manner:
Cash Receipts
The mail is opened each morning by a mail clerk in the sales
department. The mail clerk prepares a remittance advice (showing
customer and amount paid) if one is not received. The cheque and
remittance advices are then forwarded to the sales department
supervisor, who reviews each cheque and forwards the cheque and
remittance advices to the accounting...
Which is not a key element of internal control over cash receipts? A) Daily entry in...
Which is not a key element of internal control
over cash receipts?
A) Daily entry in a voucher register
B) Daily recording of all cash receipts in the accounting
records
C) Daily bank deposits
D) Immediate counting by the person opening the mail or using
the cash register
1) Sales Budget and Expected Cash Collections The marketing department of Alex Corporation has submitted the...
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Collections
The marketing department of Alex Corporation has
submitted the following sales forecast for the upcoming fiscal year
(all sales are on account):
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Budgeted unit sales
11,000
12,000
14,000
13,000
The selling price of the company’s product is $18.00 per
unit. Management expects to collect 65% of sales in the quarter in
which the sales are made, 30% in the following quarter, and 5% of
sales...
1) Sales Budget and Expected Cash Collections The marketing department of Jessi Corporation has submitted the following...
1) Sales
Budget and Expected Cash Collections
The marketing department of Jessi Corporation has submitted the
following sales forecast for the upcoming fiscal year (all sales
are on account):
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Budgeted unit sales
11,000
12,000
14,000
13,000
The selling price of the company’s product is $18.00 per unit.
Management expects to collect 65% of sales in the quarter in which
the sales are made, 30% in the following quarter, and 5% of sales
are...
A) Assume that Harvest Oaks has correctly computed its expected cash receipts and disbursements, and correctly...
A) Assume that Harvest Oaks has correctly computed its expected
cash receipts and disbursements, and correctly entered them into
the cash budget in Part 2.
B) Harvest Oaks’ beginning balance of cash on April 1 is
$450,000.
C) Harvest Oaks wants to maintain a minimum cash balance of
$400,000. The company has an agreement with a local bank that
allows the company to borrow money in any increment at the
beginning of each month. The interest rate on these loans...
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