General Accounting Foster Industries sells on terms of 2/10, net 35. Gross sales last year were $450,000, andaccounts receivable averaged $60,000. Half of Foster's customers paid on Day 10 and tookdiscounts.a) What are Foster's sales net of cash discounts taken?b) What is the total dollar finance charge paid by the non-discount-paying customers?c) What is the average collection period (DSO) for the non-discount customers?

Step 1: Define Cash DiscountCash discount refers to the special allowances permitted to the…

Answered: Foster Industries sells on terms of…

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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d) Inter accounts national Industries sells on terms of 3/10, net 50. Gross sales last year were 5,662,500 and receivable averaged 547,500. Half of International’s customers paid on the 15th day and took discounts. What are the nominal and effective costs of trade credit to International’s non-discount customers? (Hint: Calculate sales/day based on a 360-day year, then calculate average receivables of discount customers and then find the DSO for the non-discount customers.
Please Solve This Question International Industries sells on terms of 3/10, net 50. Gross sales last year were 5,662,500 and accounts receivable averaged 547,500. Half of International’s customers paid on the 15th day and took discounts. What are the nominal and effective costs of trade credit to International’s non-discount customers? (Hint: Calculate sales/day based on a 360-day year, then calculate average receivables of discount customers and then find the DSO for the non-discount customers.
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McDowell Industries sells on terms of 3/10, net 30. Total sales for the year are $912,500; 40% of the customers pay on the 10th day and take discounts, while the other 60% pay, on average, 40 days after their purchases. What is the day’s sales outstanding? What is the average amount of receivables? What is the percentage cost of trade credit to customers who take the discount? What is the percentage cost of trade credit to customers who do not take the discount and pay in 40 days. What would happen to McDowell’s account receivable if it toughened up on its collection policy with the result that all nondiscount customers paid on the 30th day?
Suppose a firm makes purchases of $3.65 million per year under terms of 2/10, net 30, and takes discounts. What is the average amount of accounts payable net of discounts? (Assume the $3.65 million of purchases is net of discounts—that is, gross purchases are $3,724,489.80, discounts are $74,489.80, and net purchases are $3.65 million.) Is there a cost of the trade credit the firm uses? If the firm did not take discounts but did pay on the due date, what would be its average payables and the nominal and effective costs of this nonfree trade credit? What would be the firm’s nominal and effective costs of not taking discounts if it could stretch its payments to 40 days?
Zocco corporation has...Accounting questions
Grunewald Industries sells on terms of 1/10, net 40. Gross sales last year were $4,453,000 and accounts receivable averaged $427,000. Half of Grunewald's customers paid on the 10th day and took discounts. What are the nominal and effective costs of trade credit to Grunewald's nondiscount customers? (Hint: Calculate daily sales based on a 365-day year, calculate the average receivables for discount customers, and then find the DSO for the nondiscount customers.) Do not round intermediate calculations. Round your answers to two decimal places.
The annual sales of a company are $235,000 including sales tax at 17.5%. Half of the sales are on credit terms; half are cash sales. The receivables in the statement of financial position are $23,500. What are the receivable days (to the nearest day)?
еВook Zane Corporation has an inventory conversion period of 90 days, an average collection period of 34 days, and a payables deferral period of 48 days. Assume 365 days in year for your calculations. a. What is the length of the cash conversion cycle? Round your answer to two decimal places. days b. If Zane's annual sales are $3,454,540 and all sales are on credit, what is the investment in accounts receivable? Do not round intermediate calculations. Round your answer to the nearest cent. $ c. How many times per year does Zane turn over its inventory? Assume that the cost of goods sold is 75% of sales. Use sales in the numerator to calculate the turnover ratio. Do not round intermediate calculations. Round your answer to two decimal places.
NEKO Inc. sells on term 3/20, net 40. Total sale for the year are P1,200,000 on which 40% is cash sales. 30% pays on the 20th day and take discounts while the remaining customers always pay on time. What is the average amount of accounts receivable? (Use 360-day year)
TMRW Co. has annual credit sales of $1,080,000 and an average collection period of 32 days in 2010. Assume a 360-day year. What is the company’s average accounts receivable balance? Accounts receivable are equal to the average daily credit sales times the average collection period. XYZ company has annual credit sales of $1,440,000 and an average collection period of 45 days in 2005. Assume a 360 day year. What is the company’s average accounts receivable balance? Accounts receivable are equal to the average daily credit sales time the average collection period. Haru company has an average collection period of 35 days. The accounts receivable balance is $105,000. What is the value of its credit sales?
XYZ Corporation has credit sales of $10,640,000 and receivales of $1,520,000. What is the receivales turnover and what is the average collection period (days sales outstanding) ?

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