28 National Co.'s budgeted sales for the coming year are P40,500,000 of which 80% are expectedto be credit sales at terms n/30. National estimates that a proposed relaxation of credit periodfrom 30 days to 45 days. Based on a 360-day year, the proposed relaxation of credit tostandards will result in an expected increase in the average accounts receivable balance of *Format: 1,111,111

be credit sales at terms n/30. National estimates that a proposed relaxatio om 30 days to 45 days. Based on a 360-day year, the proposed relaxation o andards will result in an expected increase in the average accounts receivab

be credit sales at terms n/30. National estimates that a proposed relaxatio om 30 days to 45 days. Based on a 360-day year, the proposed relaxation o andards will result in an expected increase in the average accounts receivab

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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Concept explainers

Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.

Question

National Co.'s budgeted sales for the coming year are P40,500,000 of which 80% are expected
to be credit sales at terms n/30. National estimates that a proposed relaxation of credit period
from 30 days to 45 days. Based on a 360-day year, the proposed relaxation of credit to
standards will result in an expected increase in the average accounts receivable balance of *
Format: 1,111,111

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