Beth's Society Inc., has collection centers across the country to speed up collections. The company also makes payments from remote disbursement centers so the firm's checks will take longer to clear the bank. Collection time has been reduced by two and one- half days and disbursement time increased by one and one-half days because of these policies. Excess funds are being invested in short-term instruments yielding 6 percent per annum. Required: a. If the firm has P4 million per day in collections and P3 million per day in disbursements, how much money has the cash management system freed up? b. How much can the firm eam per year on short-term investments made possible by the freed-up cash?

Beth's Society Inc., has collection centers across the country to speed up collections. The company also makes payments from remote disbursement centers so the firm's checks will take longer to clear the bank. Collection time has been reduced by two and one- half days and disbursement time increased by one and one-half days because of these policies. Excess funds are being invested in short-term instruments yielding 6 percent per annum. Required: a. If the firm has P4 million per day in collections and P3 million per day in disbursements, how much money has the cash management system freed up? b. How much can the firm eam per year on short-term investments made possible by the freed-up cash?

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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