Trix Company sells to grocery stores on credit terms of "net
60." Annual credit sales are $11 million (spread evenly throughout
the year) and its accounts average 10 days overdue. The firm's
variable cost ratio is 0.75 (i.e., variable costs are 75% of
sales). Suppose that Trix's sales are expected to increase by 32%
next year. Determine the firm's average investment in
receivables for next year under these conditions.
Enter your answers in millions and round to the second decimal...
Dome Metals has credit sales of $180,000 yearly with credit
terms of net 60 days, which is also the average collection
period.
a. Assume the firm offers a 3 percent discount for
payment in 18 days and every customer takes advantage of the
discount. Also assume the firm uses the cash generated from its
reduced receivables to reduce its bank loans which cost 12 percent.
What will the net gain or loss be to the firm if this discount...
A $52,500 new car loan is taken out with the terms 9% APR for 60
months. How much are monthly payments on this loan? ________.
A pottery factory purchases a continuous belt conveyor kiln for
$72,000. A 6.0% APR loan with monthly payments is taken out to
purchase the kiln. If the monthly payments are $746.43, how many
years will it take for this loan to be paid?
1) Credit terms that allow for a 4% discount for early
payment :
a- 2/10, N/60
b- n/45
c- FOB destination
d- FOB shipping point
e- 4/10, N/45
2) Shipping terms that would typically mean that the
seller has to pay the freight charges :
a- 2/10, N/60
b- n/45
c- FOB destination
d- FOB shipping point
e- 4/10, N/45
3) Credit terms that allow for a 2% discount for early
payment:
a- 2/10, N/60
b- n/45
c- FOB destination...
Nike is considering changing its credit terms from “net 60” to
“net 30” in its western Ohio sales territory. The company expects
sales (all on credit) to decrease by 10% from a current level of 4
million, and it expects its average collection period to decrease
from 70 days to 38 days. The bad-debt ratio should decline to 2.5%
of sales from a current level of 5% of sales. The company also
estimates that inventory investment would decrease by $100,000...
Explain what credit terms are, such as 1/10 net 60 days. What
does it mean, provide calculation with explanations? How does
interest relate to credit terms?
Kyoto Joe, Inc., sells earnings forecasts for Japanese
securities. Its credit terms are 4/10, net 60. Based on experience,
50 percent of all customers will take the discount.
a.
What is the average collection period for the company?
(Use 365 days a year. Do not round intermediate
calculations.)
b.
If the company sells 1,220 forecasts every month at a price of
$1,750 each, what is its average balance sheet amount in accounts
receivable? (Use 365 days a year. Do...
Apr.
2
Purchased $3,000 of merchandise
from Lyon Company with credit terms of 2/15, n/60, invoice dated
April 2, and FOB shipping point.
3
Paid $380 cash for shipping
charges on the April 2 purchase.
4
Returned to Lyon Company
unacceptable merchandise that had an invoice price of $500.
17
Sent a check to Lyon Company for
the April 2 purchase, net of the discount and the returned
merchandise.
18
Purchased $5,300 of merchandise
from Frist Corp. with credit terms...
Alpha purchased inventory on credit with terms FOB shipping
Point (periodic Inventory system). The inventory was shipped to
Alpha but not received. Alpha recorded the purchase and included it
in ending.
What is the JE?
Are assets, liabilities or net income; understated, overstated,
or neither? Why?
Sales (on credit terms)
A/R Balance
Current
31-60
61-90
90+
Jan
3390
6,200
3,345
1795
1000
60
Feb
3,610
6,000
3,560
1,550
825
65
Mar
3890
6,340
3,590
1800
900
50
Total
10,890
using the sample ATB above, compute the collection effectiveness
index of the company (10Items must show solutions). Then provide
analysis of the effect of the result when it will decrease and when
it will increase?