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4. Northern Company's budgeted sales for the coming year are P40.5 million of which 80% are expected to be credit sales at terms of n/30. Northern estimates that a proposes relaxation of credit standards would increase credit sales by 20% and increase the average collection period form 30 days to 40 days. Based on a 360-day year, the proposed relaxation of credit standards would result in an expected increase in the average accounts receivable balance of how much?

4. Northern Company's budgeted sales for the coming year are P40.5 million of which 80% are expected to be credit sales at terms of n/30. Northern estimates that a proposes relaxation of credit standards would increase credit sales by 20% and increase the average collection period form 30 days to 40 days. Based on a 360-day year, the proposed relaxation of credit standards would result in an expected increase in the average accounts receivable balance of how much?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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4. Northern Company's budgeted sales for the coming year are P40.5 million of which 80% are expected to be credit sales at terms of n/30. Northern estimates that a proposes relaxation of credit standards would increase credit sales by 20% and increase the average collection period form 30 days to 40 days. Based on a 360-day year, the proposed relaxation of credit standards would result in an expected increase in the average accounts receivable balance of how much?
Transcribed Image Text:4. Northern Company's budgeted sales for the coming year are P40.5 million of which 80% are expected to be credit sales at terms of n/30. Northern estimates that a proposes relaxation of credit standards would increase credit sales by 20% and increase the average collection period form 30 days to 40 days. Based on a 360-day year, the proposed relaxation of credit standards would result in an expected increase in the average accounts receivable balance of how much?
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