Please solve this General accounting questions step by step Assume that your business generated sales of $850,000last year. Year-end receivables are $120,000. You areconsidering factoring the receivables to raise cash forbusiness expansion. The factor imposes a 6 percentdiscount and charges an additional 0.8 percent for eachexpected ten-day average collection period over 40days.If the $850,000 in sales last year were evenly distributedthroughout the year, what is the average collectionperiod? Given the original terms stated in the problem,what dollar amount would you expect to receive foryour receivables?

Step 1: Definition of Average Collection Period and Factoring DiscountThe Average Collection Period…

Answered: Assume that your business generated…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

Section: Chapter Questions

Problem 2MC

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Assume that the operation of your business resulted in sales of $730,000 last year. Year-end receivables are $100,000. You are considering factoring the receivables to raise cash to help finance your ventures growth. The factor imposes a 7% discount and charges an additional 1% for each expected ten-day average collection period over thirty days. A. Estimate the dollar amount you would receive from the factor for your receivables if the collection period was thirty days or less. B. Estimate the dollar amount you would receive from the factor for your receivables if the average collection period was sixty days.
General Accounting
Financial Accounting
Company XYZ has annual credit sales of $2,500,000. Collection of the credit sales are evenly spread out over the 250 working days per year. The company’s annual cost of borrowing is 7%. How much would XYZ save each year by improving its receivables process by one day?
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