Lubners Traders is considering extending credit to some customers who may be at risk of defaulting in payment. Sales will increase by R200 000 if credit is granted to these customers. From the new accounts receivable generated, 8% is expected to be uncollectable. Additional collection costs will be 3% of sales, and the production and selling costs will be 65% of sales. Taxation is 28%.
Lubners Traders is considering extending credit to some customers who may be at risk of defaulting in payment. Sales will increase by R200 000 if credit is granted to these customers. From the new accounts receivable generated, 8% is expected to be uncollectable. Additional collection costs will be 3% of sales, and the production and selling costs will be 65% of sales. Taxation is 28%.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
5.2 Calculate the incremental
INFORMATION:
Lubners Traders is considering extending credit to some customers who may be at risk of defaulting in payment. Sales will increase by R200 000 if credit is granted to these customers. From the new accounts receivable generated, 8% is expected to be uncollectable. Additional collection costs will be 3% of sales, and the production and selling costs will be 65% of sales.
Transcribed Image Text:INFORMATION:
Conlog Limited
Extracts of Cash Flow Statement for the year ended 31 December 2020
R
Cash flow from operating activities
210 000
(330 000)
(330 000)
Cash flow from investing activities
Additions to plant and machinery
Cash flow from financing activities
120 000
Increase in long term borrowings
120 000
5.2 Calculate the incremental profit/loss after tax.
INFORMATION:
Lubners Traders is considering extending credit to some customers who may be at risk of defaulting in payment. Sales
will increase by R200 000 if credit is granted to these customers. From the new accounts receivable generated, 8% is
expected to be uncollectable. Additional collection costs will be 3% of sales, and the production and selling costs will be
65% of sales. Taxation is 28%.
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