Marshall Industries has credit sales of $225,000 yearly with creditterms of net 40 days, which is also the average collection period.Marshall does not offer a discount for early payment, so its customerstake the full 40 days to pay.1. What is the average receivables balance?2. What is the receivables turnover?3. If Marshall offered a 2 percent discount for payment in 12 days andevery customer took advantage of the new terms, what would thenew average receivables balance be?

Concept of Credit Sales:Credit sales refer to sales made by a company where payment is not collected…

Answered: Marshall Industries has credit sales of…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter18: The Management Of Accounts Receivable And Inventories

Section: Chapter Questions

Problem 10QTD

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Mr. Rich Mann, is the credit manager of MCC Inc. Mr. Mann would like to estimate the cost of credit sales. From experience, credit customers have paid their bills in an average of 40 days and a standard deviation of 12 days. Customers who pay their bills in 10 days receive a 2% discount. Accounts that are not paid within 75 days are written off as bad debts. (Assume a normal distribution) a. What percentage of accounts is within 25 and 60 days old? b. What percentage of the accounts is written off as bad debts or receives the discount For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BIUS E E A v 、工%ロ启 Q Paragraph Arial 10pt ...
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