eattle Transit Ltd. operates a local mass transit system. The transit authority is a state governmental agency. It has an a
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Seattle Transit Ltd. operates a local mass transit system. The transit authority is a state governmental agency. It has an agreement with the state government to provide rides to senior citizens for 67 cents per trip. The government will reimburse Seattle Transit for the “cost” of each trip taken by a senior citizen.
The regular fare is $3.70 per trip. After analyzing its costs, Seattle Transit figured that, with its operating deficit, the full cost of each ride on the transit system is $5.70. Routes, capacity, and operating costs are unaffected by the number of senior citizens on any route.
Required:
b. Which price would Seattle Transit prefer? (Round your answer to 2 decimal places.)
c. Which price would the state government prefer? (Round your answer to 2 decimal places.)
d. If Seattle Transit provides an average of 167,000 trips for senior citizens in a given month, what is the monthly value of the difference between the prices in full capacity?
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