EBK AUDITING+ASSURANCE SERVICES
EBK AUDITING+ASSURANCE SERVICES
17th Edition
ISBN: 9780135171219
Author: ARENS
Publisher: PEARSON CO
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Chapter 2, Problem 14.1MCQ
To determine

Identify the correct option for the given statement.

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Cobalt Distributors processes customer payments at its central office in Denver. The company has an average accounts receivable (A/R) balance of $4.2 million, which is financed through a line of credit at an annual interest rate of 11.8%. Management is evaluating a new lockbox system that is expected to reduce A/R by 19%. The annual cost of operating the lockbox system is $18,500. What is the estimated net annual savings from implementing the lockbox system?
Adam Traders is preparing its cash budget for the month of June. The company estimated credit sales for June at $180,000. Actual credit sales for May were $140,000. Estimated collections in June for credit sales in June are 25%. Estimated collections in June for credit sales in May are 60%. Estimated collections in June for credit sales prior to May are $10,000. Estimated write-offs in June for uncollectible credit sales are $6,000. The estimated provision for bad debts in June for credit sales in June is $5,000. What are the estimated cash receipts from accounts receivable collections in June?
Please give me true answer this financial accounting question
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