Economic Order Quantity. Assume that Every- man's Bookstore uses up cash at a steady rate of $200,000 per year. The interest rate is 2% and each sale of securities costs $20. (LO1) a. How many times a year should the store sell securities? b. What is its average cash balance

Economic Order Quantity. Assume that Every- man's Bookstore uses up cash at a steady rate of $200,000 per year. The interest rate is 2% and each sale of securities costs $20. (LO1) a. How many times a year should the store sell securities? b. What is its average cash balance

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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Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

Question

Economic Order Quantity. Assume that Every-
man's Bookstore uses up cash at a steady rate of
$200,000 per year. The interest rate is 2% and each sale
of securities costs $20. (LO1)
a. How many times a year should the store sell
securities?
b. What is its average cash balance?

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