Dog Food Corp. normally take 5 days to pay for average daily credit purchases of P10,000. Its average daily sales are P20,000, and it collects accounts in 7 days. Use 360-days. What is its net credit position? a)100,000 b)90,000 c)(75,000) d)(80,000)

Dog Food Corp. normally take 5 days to pay for average daily credit purchases of P10,000. Its average daily sales are P20,000, and it collects accounts in 7 days. Use 360-days. What is its net credit position? a)100,000 b)90,000 c)(75,000) d)(80,000)

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter21: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 2P: Medwig Corporation has a DSO of 17 days. The company averages 3,500 in sales each day (all customers...

See similar textbooks

Dog Food Corp. normally take 5 days to pay for average daily

credit purchases of P10,000. Its average daily sales are P20,000, and it collects accounts in 7 days. Use 360-days. What is its net credit position?

a)100,000
b)90,000
c)(75,000)
d)(80,000)

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

4. KK Co. normally takes 30 days to pay for its average daily credit purchases of P2,000. Its average daily sales are P3,000, and it collects accounts in 25 days. What is its net credit position? (Note that a negative position implies receivables exceed payables.) A. P1,000 B. (P1,000) C. P15,000 D. (P15,000) 5. A firm is offered trade credit terms of 3/15, net 45 days. The firm does not take the discount, and it pays after 67 days. What is the nominal annual cost of not taking the discount? (Assume a 365-day year.) A. 21.71% B. 22.07% C. 22.95% E. 24,52% D. 23.48% 6. GFB Co. buys on terms of 2/15, net 30 days. It does not take discounts, and it typically pays 30 days after the invoice date. Net purchases amount to P730,000 per year. On average, how much "free" trade credit does GFB Co. receive during the year? (Assume a 365-day year.) А. Р30,000 С. Р50,000 E. P70,000 B. P40,000 D. P60,000
McGriff Dog Food Company normally takes 30 days to pay for average daily credit purchases of $9,730. Its average daily sales are $10,010, and it collects accounts in 32 days. a. What is its net credit position? Net credit position b-1. If the firm extends its average payment period from 30 days to 37 days (and all else remains the same), what is the firm's new net credit position? (Negative amount should be indicated by a minus sign.) Net credit position b-2. Has the firm improved its cash flow? Yes No
Salma Corporation sells on terms of net/90. Their accounts receivable are on average 20 days past due. If annual credit sales are P800,000, what is the company’s average investment in accounts receivable? choose the letter of correct answera. P44,444.00b. P144,444.00c. P224,444.00d. P244,444.00e. P344,444.00
Need help with this question
ngram Office Supplies, Inc., buys on terms of 2/15, net 50 days. It does not take discounts, and it typically pays on time, 50 days after the invoice date. Net purchases amount to $675,000 per year. On average, what is the dollar amount of costly trade credit (total credit – free credit) the firm receives during the year? (Assume a 365-day year, and note that purchases are net of discounts.) Do not round intermediate calculations. $56,959 $64,726 $78,318 $59,548 $53,723
13. Turnip Co.'s average collection period is 20 days. The average daily sales is P5,000. All of the firm's customers pay by credit card. How much is the firm's average A/R balance? A. P250 В. Р5,000 С. Р50,000 D. P100,000
(B) Receivables: Credit Terms: ABC sold boxes of candles at P1,000 each. Each box costs P750. Daily sales total 500 boxes over its 250-work day year. All sales are on credit. For the coming year, it plans to accept customers who have less desirable credit ratings. Sales are expected to increase by 10%. Average collection period will increase from 40 days to 50 days. Bad debts will increase from 1% to 3% of sales. Operating expenses will stay the same. For profitability analysis, ABC uses an 8% effective interest rate. Compute for the required by filling up the supporting table. Required: How much would the following be assuming that ABC proceeds with its plan to accept the new market group? Increase in gross profit Increase in receivables carrying cost 7. 8. 9. Increase in bad debts 10. Net advantage or disadvantage of the plan Notes: The Increase/(Decrease) column may be computed either by row or later once the Current and Proposed columns are complete. Some parts of the computations…
MRK corporation has a DSO of 35 days. The company's annual credit sales are $10 million. What is the level of its accounts receivable? Assume there are 365 days in a year.? Group of answer choices $350 million $958, 904 $400 million $1,369, 863
Lalit Lumber Company has sales of $13 million per year, all on credit terms calling for payment within 30 days, and its accounts receivable are $3.45 million. Assume 365 days in the year for your calculations. 1. What is Lalit's DSO? 2. What would DSO be if all customers paid on time? General Account
Kirk Development buys on terms of 2/15, net 60 days. It does not take discounts, and it typically pays on time, 60 days after the invoice date. Net purchases amount to $750,000 per year. On average, what is the dollar amount of total trade credit (costly + free) the firm receives during the year, i.e., what are its average accounts payable? (Assume a 365-day year, and note that purchases are net of discounts.)
2) Medwig Corporation has a DSO of 18 days. The company averages $3,000 in sales each day (all customers take credit). What is the company's average accounts receivable? Assume a 365-day year. Round your answer to the nearest dollar. $
What is the firm s average correction period (ACP)? Solve question general Accounting