Want your help with this Problem A firm sells on terms of 2/15, net 45. Total credit salesfor the year are $1,050,000. Thirty-five percent ofcustomers pay on the 15th day and take a discount; therest pay, on average, 50 days after purchase. What is thefirm's ACP (Average Collection Period)?

Concept of Credit Terms (2/15, net 45):Credit terms such as "2/15, net 45" indicate the payment…

Answered: A firm sells on terms of 2/15, net 45.…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

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Chapter7: Budgeting

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Problem 11EB: Gear Up Co. pays 65% of its purchases in the month of purchase, 30% in the month after the purchase,...

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Starlight Enterprises has net credit sales for 2019 in the amount of $2,600,325, beginning accounts receivable balance of $844,260, and an ending accounts receivable balance of $604,930. Compute the accounts receivable turnover ratio and the number of days sales in receivables ratio for 2019 (round answers to two decimal places). What do the outcomes tell a potential investor about Starlight Enterprises if the industry average is 1.5 times and the number of days sales ratio is 175 days?
Negus Enterprises has an inventory conversion period of 50 days, an average collection period of 35 days, and a payables deferral period of 25 days. Assume that cost of goods sold is 80% of sales. What is the length of the firm’s cash conversion cycle? If annual sales are $4,380,000 and all sales are on credit, what is the firm’s investment in accounts receivable? How many times per year does Negus Enterprises turn over its inventory?
Grunewald Industries sells on terms of 2/10, net 40. Gross sales last year were 4,562,500 and accounts receivable averaged 437,500. Half of Grunewalds customers paid on the 10th day and took discounts. What are the nominal and effective costs of trade credit to Grunewalds nondiscount customers? (Hint: Calculate daily sales based on a 365-day year, calculate the average receivables for discount customers, and then find the DSO for the nondiscount customers.)
A customer takes out a loan of $130,000 on January 1, with a maturity date of 36 months, and an annual interest rate of 11%. If 6 months have passed since note establishment, what would be the recorded interest figure at that time? A. $7,150 B. $65,000 C. $14,300 D. $2,383
Millennial Manufacturing has net credit sales for 2018 in the amount of $1,433,630, beginning accounts receivable balance of $585,900, and an ending accounts receivable balance of $621,450. Compute the accounts receivable turnover ratio and the number of days sales in receivables ratio for 2018 (round answers to two decimal places). What do the outcomes tell a potential investor about Millennial Manufacturing if industry average is 2.6 times and number of days sales ratio is 180 days?
What is the firm's average collection period?
What the firms ACP ?
Pets Store Inc. sells on terms of 3/20, net 35. What is the effective annual cost of trade credit under these terms? Use a 365-day year. Round answer to two decimal places.
McEwan Industries sells on terms of 3/10, net 35. Total sales for the year are $1,947,000; 40% of the customers pay on the 10th day and take discounts, while the other 60% pay, on average, 74 days after their purchases. Assume 365 days in year for your calculations. a. What is the days sales outstanding? Round your answer to two decimal places. days b. What is the average amount of receivables? Do not round intermediate calculations. Round your answer to the nearest cent. c. What is the percentage cost of trade credit to customers who take the discount? If your answer is zero, enter zero. Round your answer to two decimal places. d. What is the percentage cost of trade credit to customers who do not take the discount and pay in 74 days? If your answer is zero, enter zero. Do not round intermediate calculations. Round your answers to two decimal places. Nominal cost: Effective cost: % e. What would happen to McEwan's accounts receivable if it toughened up on its collection policy with…
McDowell Industries sells on terms of 3/10, net 30. Total sales for the year are $912,500; 40% of the customers pay on the 10th day and take discounts, while the other 60% pay, on average, 40 days after their purchases. What is the day’s sales outstanding? What is the average amount of receivables? What is the percentage cost of trade credit to customers who take the discount? What is the percentage cost of trade credit to customers who do not take the discount and pay in 40 days. What would happen to McDowell’s account receivable if it toughened up on its collection policy with the result that all nondiscount customers paid on the 30th day?
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A firm sells on terms of 2/15, net 45. Total credit sales for the year are $1,050,000. Thirty-five percent of customers pay on the 15th day and take a discount; the rest pay, on average, 50 days after purchase. What is the firm's ACP (Average Collection Period)?