Based on a 360-day year, the proposed relaxation of credit standards would result in an expected increase in the average accounts receivable balance of how much? 4. Northem Company's budgeted sales for the coming year are P40.5 million ofwhich 80% are expected to be credit sales at tems of n/30. Northern estimates thata proposes relaxation of credit standards would increase credit sales by 20% andincrease the average collection period form 30 days to 40 days. Based on a 360-dayyear, the proposed relaxation of credit standards would result in an expectedincrease in the average accounts receivable balance of how much?

Current Credit Sales = 40500000*80%= 32400,00 Account receivable current = 32400000*30/360=2700,000…

Answered: it sales at tens o ndards would inc od…

Business

Accounting

it sales at tens o ndards would inc od form 30 days

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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Concept explainers

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.

Question

Based on a 360-day year, the proposed relaxation of credit standards would result in an expected increase in the average accounts receivable balance of how much?

4. Northem Company's budgeted sales for the coming year are P40.5 million of
which 80% are expected to be credit sales at tems of n/30. Northern estimates that
a proposes relaxation of credit standards would increase credit sales by 20% and
increase the average collection period form 30 days to 40 days. Based on a 360-day
year, the proposed relaxation of credit standards would result in an expected
increase in the average accounts receivable balance of how much?

Definition Definition Money that the business will be receiving from its clients who have utilized the credit provided to buy its goods and services. The credit period typically lasts for a short term, lasting from a few days, a few months, to a year.

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