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?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter18: The Management Of Accounts Receivable And Inventories
Section: Chapter Questions
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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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