Customer Account receivable Average age of account Average payment period of customer $37,000 40 days 30 days 42,000 25 50 15,000 40 60 8,000 30 35 50,000 40 12,000 28 30 G 24,000 30 70 Н 46,000 29 40 3,000 30 65 22,000 25 35 62,000 35 40 80,000 60 70
Kansas City Castings (KCC) is attempting to obtain the maximum loan possible using
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If the bank will accept all accounts that can be collected in 45 days or less as long as the customer has a history of paying within 45 days, which accounts will be acceptable? What is the total dollar amount of accounts receivable collateral? (Note: Accounts receivable that have an average age greater than the customer’s average payment period are also excluded.)
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In addition to the conditions in part a, the bank recognizes that 5% of credit sales will be lost to returns and allowances. Also, the bank will lend only 80% of the acceptable collateral (after adjusting for returns and allowances). What level of funds would be made available through this lending source?
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