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15. The factoring department of Garcia Bank is processing 100,000 invoices per year with average invoice value of $1,500. Garcia bank buys the accounts receivable at 4% off the invoice value. The average collection period is 30 days. Currently 2% of the accounts receivable turns out to be bad debt. The annual interest rate is 10%. The annual operating expense of this department is $400,000. What is the gross profit before interest and tax for the factoring department of Garcia bank.

15. The factoring department of Garcia Bank is processing 100,000 invoices per year with average invoice value of $1,500. Garcia bank buys the accounts receivable at 4% off the invoice value. The average collection period is 30 days. Currently 2% of the accounts receivable turns out to be bad debt. The annual interest rate is 10%. The annual operating expense of this department is $400,000. What is the gross profit before interest and tax for the factoring department of Garcia bank.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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15. The factoring department of Garcia Bank is processing 100,000 invoices per year with average invoice value of $1,500. Garcia bank buys the accounts receivable at 4% off the invoice value. The average collection period is 30 days. Currently 2% of the accounts receivable turns out to be bad debt. The annual interest rate is 10%. The annual operating expense of this department is $400,000. What is the gross profit before interest and tax for the factoring department of Garcia bank.
Transcribed Image Text:15. The factoring department of Garcia Bank is processing 100,000 invoices per year with average invoice value of $1,500. Garcia bank buys the accounts receivable at 4% off the invoice value. The average collection period is 30 days. Currently 2% of the accounts receivable turns out to be bad debt. The annual interest rate is 10%. The annual operating expense of this department is $400,000. What is the gross profit before interest and tax for the factoring department of Garcia bank.
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