A firm's annual credit sales are $1.71 million, with 49.56% of its daily average paid out in purchases. It usually takes the company 34days to meet its purchasing obligations. This payment pattern has not changed in recent years. However, the firm's commitment toaccounts receivable has shifted based on its current annual net income of $28.6k which meets the 3.44% required return, anticipatedby senior management a year earlier. Normally, the firm collects its accounts in 23 days, an average which remains unaffected.Required: In percentage terms, by how much are the firm's receivables greater (or less) than its payables?Note: The term "k is used to represent thousands (x $1.000).% (ROUND YOUR ANSWER TO 2 DECIMAL PLACES. FOR EXAMPLE: 17.23)

Receivables outstanding = 1710000×23/365= $107,753 Payables outstanding = 1710000×49.56%…

Answered: al credit sales ts purchasing ivable…

Business

Accounting

al credit sales ts purchasing ivable has shi agement a ye

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Define the term merchandise returns.

A: Merchandise Inventory: Merchandise is the stock of goods bought by a wholesaler, or a retailer, or a…

Q: If title to merchandise purchases passes to the buyer when the goods are delivered to the buyer, the…

A: FOB shipping point sale: FOB shipping point sale: When the goods are shipped to the buyer, the title…

Q: An account that is classified as a contra-revenue: O a. may include sales discounts and credit card…

A: Solution: A contra revenue account is reverse of revenue account i.e. contra revenue accounts is…

Q: In accountinf for sales discounts, most companies use the a. Allowance method b. Gross price…

A: The most commonly used method is the gross price method.in these sales, the discount is deducted…

Q: Explain an example of dollar value LIFO retail method.

A: Under this method, goods are combined into pools and all increases and decreases in a pool are…

Q: SLO-5.2. Using the term means that the buyer will pay the freight charges of the merchandise to the…

A: whenever the goods are purchased at the raw material for the production of goods are purchase there…

Q: 42. Sale of inventory on credit Debit Credit a. Cost of sales b. Cash Sales Accounts receivable c.…

A: >Sales of inventory can also be in cash or on account. Sales is a revenue element. If sales are…

Q: Define Sales discounts.

A: Merchandising businesses: Merchandising companies which buy goods from suppliers, or manufacturers,…

Q: If title to merchandise purchases passes to the buyer when the goods are shipped from the seller,…

A: Free on Board is a trade term used to indicate whether the buyer or the seller is liable for goods…

Q: Pit Corporation owns 90% of Stop Company's outstanding common stock. On 07/01/20, Pit sold inventory…

A: Journal entry: A journal entry is used to record day-to-day transactions of the business by debiting…

Q: Difference between sales receipts and invoices

Q: List price × trade discount rate = amount of trade discount. true or false

A: The question is related to true or false.

Q: ll business decisions have a on people. Oapplication O risk O effect recourse

A: Solution Concept Every business is operated on the society and it largely is affected by the society…

Q: 31. Gross Sales - Sales Discount - Sales Returns and Allowances is equal to?

A: Gross Sales : Grand total of sales transaction during a particular time period. Net Sales : Net…

Q: Which of the following journal entries is appropiate when a credit sales is made under a perpetual…

A: Under the perpetual inventory method, we need to record sales and also the cost of goods sold.

Q: How to find sales under LIFO

A: LIFO stands for last in first out. It represents that the units that are purchased last would be…

Q: A sales discount is added in calculating net sales

A: The net sales are reported in the income statement of the company. The expenses would be deducted…

Q: How to calculate the list price? O a. List price = Amount of Discount/Rate of Discount O b. List…

A: Discount means the amount which is not required to be paid or received. Discount is deducted to find…

Q: How to calculate total selling expense

A: Selling expenses are the expenses incurred to sell a product to the customer.

Q: Explain the accounting for sales with right of return.

A: Definition: Accounting for sales with a right of return: Accounting for sales with the right of…

Q: Quantity discount grand to customers to encourage them to paid early O True O False

A: (1) The given statement is False. Quantity discount : Quantity discount is also known as Trade…

Q: purchase discount is relevant into the followings cycles: a. payroll and personnel O b. sales and…

A: Accounting is essential to operating a company since it allows businesses to track income and…

Q: What is a sale on credit and why it is needed? Give three examples?

A: Sale on Credit: A sale on credit is revenue earned by a company when it sells goods and allows the…

Q: Which of the following is not included when computing Net Purchases?A. purchase discountsB.…

A: Purchases is the value of cost of goods that is being purchased or acquired from the suppliers…

Q: 4. Which of the following accounts are used when recording a purchase?

A: 1. If Cash purchase: If the purchase is made out of cash, both cash and inventory accounts are used…

Q: Allows purchases beyond credit limit. This is referred to

A: Credit purchase limit terms are used in credit card cases. If any user of a credit card makes a…

Q: the way to adjust purchases in order to arrive at the cost of sales figure is to ?

A: Cost of Sales = Opening Inventory + Purchases - Closing Inventory

Q: Which numbers do I need to use to compute the sales

A: Sales is the dollar value received by selling any number of units.

Q: hich of the following accounts is a contra account? Select one: a. Drawing b. Transportation In c.…

A: Solution: A contra account is related to a main account and used in a general ledger to reduce the…

Q: d. ayable 13. If title to merchandise purchases passes to the buyer when the goods are delivered to…

A: Introduction to Merchandise Merchandise is referred to as the inventory is a good or product that a…

Q: How to get or compute the gross sales

A: Gross sales is presented in income statement.

Q: Explain “Sales Returns and Allowances”. Why does this account have a normal debit balance?

A: Sales Returns and Allowances Sales Return and Allowances is actually a contra revenue account (i.e.…

Q: an entry for a purchase return will include a. a debit to inventory b. a debit to sales returns and…

A: Journal Entry :— It is an act of recording transactions in books of account when transaction…

Q: ... concentrates on the physical linking of the particulars item sold. a. FIFO b. weighted…

A: The question is multiple choice question Required Choose the Correct Option.

Q: 2. Purchases of merchandise inventories are always recorded net of: a) Trade discount b) Cash…

A: The question is multiple choice question. Required Choose the Correct Option.

Q: What do credit terms of 4/10, n/30 mean in regard to a purchase? --... -.--

A: Purchase is the term used by the entity to record the purchase of inventory for the resale in the…

Q: explain what is Trade credit with a comprehensive example.

A: Trade credit is a type of commercial financing in which a customer is allowed to purchase goods or…

Q: which two accounts are used to recognize shipping charges for a buyer assuming the buyer purchases…

A: Shipping cost depends upon the terms of the contract. Generally, there are two types of conditions.…

Question

A firm's annual credit sales are $1.71 million, with 49.56% of its daily average paid out in purchases. It usually takes the company 34
days to meet its purchasing obligations. This payment pattern has not changed in recent years. However, the firm's commitment to
accounts receivable has shifted based on its current annual net income of $28.6k which meets the 3.44% required return, anticipated
by senior management a year earlier. Normally, the firm collects its accounts in 23 days, an average which remains unaffected.
Required: In percentage terms, by how much are the firm's receivables greater (or less) than its payables?
Note: The term "k is used to represent thousands (x $1.000).
% (ROUND YOUR ANSWER TO 2 DECIMAL PLACES. FOR EXAMPLE: 17.23)

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Are net sales = Sales less?a. Sales returnsb. Sales discountsc. Sales returns & allowancesd. Sales returns & allowances and sales discounts
Match each item to a choice: Choices: Purchase discount Sales discount Buyer Seller
The objective of is to encourage the buyer to purchase in large quantities and to increase the level of sales. a. Mark-up b. Cash discount c. Trade discount d. Margin
Credit termog 1/10, n/30 means
3. Give at least one example of each Merchandise transaction for a) Receipt b) Sales Invoice (Credit) c) Debit note d) Credit note e) Voucher
1. Explain overview of sales report. 2. Why sales report important. 3. Recommendation of sales report.
2) Sea Travel sells motor boats. One of Sea Travel's most popular models is the Wing. During the current year, Sea Travel purchased 24 Wings at the following costs. Total cost Unit Cost $7000 $7100 $7250 Purchase Date Units Purchased May 2 May 20 May 25 $28,000 14,200 4 8 58000 June 5 10 $7300 73000 24 $173,200 On May 28, Sea Travel sold 11 Wings to the jack Sport racing team. Compute a) the cost of goods sold on May 28 and b) The ending inventory of Wing boats at June 5, using the following cost flow assumptions: c) Prepare journal entries to record the cost of the 11 wings sold on May 28, assuming that the company uses the:
Match each phrase with its definition. 1. Seller's description of a cash discount granted to buyers in return for early payment. 2. The amount of time allowed by a seller before payment is due from the buyer. 3. Time period in which a cash discount is available. 4. Refers to credit terms where goods in transit are owned by the seller. 5. Refers to credit terms where goods in transit are owned by the buyer. 6. Calculated as net sales minus cost of goods sold. 7. A current asset that includes the cost to buy goods and make them ready for sale. 8. Purchaser's description of a cash discount received from a supplier of goods.
Explain the importance of proper credit approval for sales only typed solution
Credit terms of 1/10, n/30 means
Q12
Which of the following accounts would normally have adebit balance?a. Inventoryb. Sales Returns and Allowancesc. Sales Discountsd. All of the above