
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
9th Edition
ISBN: 9781305635937
Author: Eugene F. Brigham, Joel F. Houston
Publisher: Cengage Learning
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Chapter 15, Problem 2P
Summary Introduction
To determine: The day sales outstanding, the day sales outstanding in the case when customers are paid on time and the amount of capital released.
Introduction:
Receivables Investment:
The receivables are the cash, which the company owes from its customers. These are the cash which will be received from the customers, so that they are known as receivables. The investment of the receivables is known as the receivables investment. The company can earn a good value of
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Scenario:
Jim played football for a famous club but, due to a long term injury and on medical advice, he retired from the game in January 2007. The club, grateful for Jim’s contribution to their success over the years, held a testimonial match in Jim’s honour. Jim received €150,000 from this testimonial match and he decided to open a shop selling sporting goods with the proceeds. On 1 May 2007, Jim opened a business bank account into which he paid the €150,000. In the first year of trading, he undertook the following transactions:
2 May 2007: Jim signed a five year lease on a shop in the town centre and paid €50,000 to cover the lease for the whole five years
3 May 2007: Jim paid shop fitters €10,000 for shelves and racking and for the electronic till in which to record sales. Jim expects these assets will also have a useful life of 5 years.
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Help with questions 7-24
CARS Auto Co. Ltd – Alpha Branch
Unadjusted Trial Balance December 31, 2024
Data presented for the adjusting entries include the following:
Rent expense of $160,000 paid for the year was debited to CARS withdrawal account because of an oversight on the part of the Data Entry Clerk and this remained unadjusted as at year end.
The company paid $24,330 on account for a credit purchase made earlier in the year but this entry was not recorded at year end.
Supplies on hand at year end, $1,100.
Depreciation on Leasehold improvement, $20,000.
Depreciation on Furniture and Fixtures, $80,000.
Salaries owed but not yet paid, $64,450.
Accrued service revenue, $65,420.
$44,000 of the unearned service revenue has been earned.
Requirements:
Explain why adjusting entries are required.
Prepare the adjusting journal entries at December 31st, 2024.
Open the ledger accounts in T-account form with their unadjusted balances then post the adjusting entries to the affected accounts, then balance off each…
Chapter 15 Solutions
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Ch. 15 - What are some pros and cons of holding high levels...Ch. 15 - Prob. 2QCh. 15 - What are the two definitions of cash, and why do...Ch. 15 - Prob. 4QCh. 15 - What are the four key factors in a firms credit...Ch. 15 - Prob. 6QCh. 15 - Why is some trade credit called free while other...Ch. 15 - Define each of the following loan terms, and...Ch. 15 - Prob. 9QCh. 15 - Indicate using a (+), (), or (0) whether each of...
Ch. 15 - CASH CONVERSION CYCLE Parramore Corp has 12...Ch. 15 - Prob. 2PCh. 15 - COST OF TRADE CREDIT AND BANK LOAM Lancaster...Ch. 15 - CASH CONVERSION CYCLE Zane Corporation has an...Ch. 15 - RECEIVABLES INVESTMENT McEwan Industries sells on...Ch. 15 - WORKING CAPITAL INVESTMENT Pasha Corporation...Ch. 15 - CASH CONVERSION CYCLE Chastain Corporation is...Ch. 15 - CURRENT ASSETS INVESTMENT POLICY Rentz Corporation...Ch. 15 - Prob. 9PCh. 15 - CASH BUDGETING Helen Bowers, owner of Helens...Ch. 15 - CASH BUDGETING Rework problem 15-10 using a...Ch. 15 - Prob. 12IC
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