Whether the changes in credit terms can be made.

Question

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Answer 1

Question

Chapter 22, Problem 1Q

a)

Summary Introduction

To determine: Whether the changes in credit terms can be made.

a)

Expert Solution

Explanation of Solution

Cash discounts:

Cash discounts are generally given to boost the early payments
To attract the customers by way of lowering the prices effectively.
Some credit terms are 2/10, net 30 this denotes that a 2% discount will apply when the payment is made within the 10 days or else the account will be paid within 30 days

b)

Summary Introduction

To determine: Seasonal dating

b)

Expert Solution

Explanation of Solution

Seasonal dating arranges the invoice date or the date at which the discount and credit period starts, to a time during the own selling season of the buyers irrespective of the actual sale date.

c)

Summary Introduction

To determine: Aging schedule and DSO-days sales outstanding.

c)

Expert Solution

Explanation of Solution

An aging schedule divide the accounts receivable according to the time period that is how long the receivables been outstanding.

It provides a clear picture on the accounts receivables structure than which is provided by DSO. Whereas,

DSO is the measure of average length of time which is taken for customers to make payments on their credit purchases.

d)

Summary Introduction

To determine: Uncollected balances schedule.

d)

Expert Solution

Explanation of Solution

It shows the remaining uncollected receivables of each month as a % of month’s sales. By comparing this over time can be find the changes in the payment behavior of the customers, can avoid the misleading signals which are given by aging schedule and DSO when sales are seasonal.

e)

Summary Introduction

To determine: Discount interest, simple interest and add on interest.

e)

Expert Solution

Explanation of Solution

The case when the interest is not earned on interest is termed as simple interest
Discount interest is determined on the face value of the loan but it is paid in advance.
Add-on interest is termed as an interest and it is determined and added to the funds which are received to evaluate the face value of an installment loan.

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1. Waterfront Inc. wishes to borrow on a short-term basis without reducing its current ratio below 1.25. At present its current assets and current liabilities are $1,600 and $1,000 respectively. How much can Waterfront Inc. borrow?

Answer 2

Question

Chapter 22, Problem 1Q

a)

Summary Introduction

To determine: Whether the changes in credit terms can be made.

a)

Expert Solution

Explanation of Solution

Cash discounts:

Cash discounts are generally given to boost the early payments
To attract the customers by way of lowering the prices effectively.
Some credit terms are 2/10, net 30 this denotes that a 2% discount will apply when the payment is made within the 10 days or else the account will be paid within 30 days

b)

Summary Introduction

To determine: Seasonal dating

b)

Expert Solution

Explanation of Solution

Seasonal dating arranges the invoice date or the date at which the discount and credit period starts, to a time during the own selling season of the buyers irrespective of the actual sale date.

c)

Summary Introduction

To determine: Aging schedule and DSO-days sales outstanding.

c)

Expert Solution

Explanation of Solution

An aging schedule divide the accounts receivable according to the time period that is how long the receivables been outstanding.

It provides a clear picture on the accounts receivables structure than which is provided by DSO. Whereas,

DSO is the measure of average length of time which is taken for customers to make payments on their credit purchases.

d)

Summary Introduction

To determine: Uncollected balances schedule.

d)

Expert Solution

Explanation of Solution

It shows the remaining uncollected receivables of each month as a % of month’s sales. By comparing this over time can be find the changes in the payment behavior of the customers, can avoid the misleading signals which are given by aging schedule and DSO when sales are seasonal.

e)

Summary Introduction

To determine: Discount interest, simple interest and add on interest.

e)

Expert Solution

Explanation of Solution

The case when the interest is not earned on interest is termed as simple interest
Discount interest is determined on the face value of the loan but it is paid in advance.
Add-on interest is termed as an interest and it is determined and added to the funds which are received to evaluate the face value of an installment loan.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 22, Problem 1Q

a)

Summary Introduction

To determine: Whether the changes in credit terms can be made.

a)

Expert Solution

Explanation of Solution

Cash discounts:

Cash discounts are generally given to boost the early payments
To attract the customers by way of lowering the prices effectively.
Some credit terms are 2/10, net 30 this denotes that a 2% discount will apply when the payment is made within the 10 days or else the account will be paid within 30 days

b)

Summary Introduction

To determine: Seasonal dating

b)

Expert Solution

Explanation of Solution

Seasonal dating arranges the invoice date or the date at which the discount and credit period starts, to a time during the own selling season of the buyers irrespective of the actual sale date.

c)

Summary Introduction

To determine: Aging schedule and DSO-days sales outstanding.

c)

Expert Solution

Explanation of Solution

An aging schedule divide the accounts receivable according to the time period that is how long the receivables been outstanding.

It provides a clear picture on the accounts receivables structure than which is provided by DSO. Whereas,

DSO is the measure of average length of time which is taken for customers to make payments on their credit purchases.

d)

Summary Introduction

To determine: Uncollected balances schedule.

d)

Expert Solution

Explanation of Solution

It shows the remaining uncollected receivables of each month as a % of month’s sales. By comparing this over time can be find the changes in the payment behavior of the customers, can avoid the misleading signals which are given by aging schedule and DSO when sales are seasonal.

e)

Summary Introduction

To determine: Discount interest, simple interest and add on interest.

e)

Expert Solution

Explanation of Solution

The case when the interest is not earned on interest is termed as simple interest
Discount interest is determined on the face value of the loan but it is paid in advance.
Add-on interest is termed as an interest and it is determined and added to the funds which are received to evaluate the face value of an installment loan.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 22, Problem 1Q

a)

Summary Introduction

To determine: Whether the changes in credit terms can be made.

a)

Expert Solution

Explanation of Solution

Cash discounts:

Cash discounts are generally given to boost the early payments
To attract the customers by way of lowering the prices effectively.
Some credit terms are 2/10, net 30 this denotes that a 2% discount will apply when the payment is made within the 10 days or else the account will be paid within 30 days

b)

Summary Introduction

To determine: Seasonal dating

b)

Expert Solution

Explanation of Solution

Seasonal dating arranges the invoice date or the date at which the discount and credit period starts, to a time during the own selling season of the buyers irrespective of the actual sale date.

c)

Summary Introduction

To determine: Aging schedule and DSO-days sales outstanding.

c)

Expert Solution

Explanation of Solution

An aging schedule divide the accounts receivable according to the time period that is how long the receivables been outstanding.

It provides a clear picture on the accounts receivables structure than which is provided by DSO. Whereas,

DSO is the measure of average length of time which is taken for customers to make payments on their credit purchases.

d)

Summary Introduction

To determine: Uncollected balances schedule.

d)

Expert Solution

Explanation of Solution

It shows the remaining uncollected receivables of each month as a % of month’s sales. By comparing this over time can be find the changes in the payment behavior of the customers, can avoid the misleading signals which are given by aging schedule and DSO when sales are seasonal.

e)

Summary Introduction

To determine: Discount interest, simple interest and add on interest.

e)

Expert Solution

Explanation of Solution

The case when the interest is not earned on interest is termed as simple interest
Discount interest is determined on the face value of the loan but it is paid in advance.
Add-on interest is termed as an interest and it is determined and added to the funds which are received to evaluate the face value of an installment loan.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 22, Problem 1Q

a)

Summary Introduction

To determine: Whether the changes in credit terms can be made.

a)

Expert Solution

Explanation of Solution

Cash discounts:

Cash discounts are generally given to boost the early payments
To attract the customers by way of lowering the prices effectively.
Some credit terms are 2/10, net 30 this denotes that a 2% discount will apply when the payment is made within the 10 days or else the account will be paid within 30 days

b)

Summary Introduction

To determine: Seasonal dating

b)

Expert Solution

Explanation of Solution

Seasonal dating arranges the invoice date or the date at which the discount and credit period starts, to a time during the own selling season of the buyers irrespective of the actual sale date.

c)

Summary Introduction

To determine: Aging schedule and DSO-days sales outstanding.

c)

Expert Solution

Explanation of Solution

An aging schedule divide the accounts receivable according to the time period that is how long the receivables been outstanding.

It provides a clear picture on the accounts receivables structure than which is provided by DSO. Whereas,

DSO is the measure of average length of time which is taken for customers to make payments on their credit purchases.

d)

Summary Introduction

To determine: Uncollected balances schedule.

d)

Expert Solution

Explanation of Solution

It shows the remaining uncollected receivables of each month as a % of month’s sales. By comparing this over time can be find the changes in the payment behavior of the customers, can avoid the misleading signals which are given by aging schedule and DSO when sales are seasonal.

e)

Summary Introduction

To determine: Discount interest, simple interest and add on interest.

e)

Expert Solution

Explanation of Solution

The case when the interest is not earned on interest is termed as simple interest
Discount interest is determined on the face value of the loan but it is paid in advance.
Add-on interest is termed as an interest and it is determined and added to the funds which are received to evaluate the face value of an installment loan.

Answer 6

Chapter 22, Problem 1Q

a)

Summary Introduction

To determine: Whether the changes in credit terms can be made.

a)

Expert Solution

Explanation of Solution

Cash discounts:

Cash discounts are generally given to boost the early payments
To attract the customers by way of lowering the prices effectively.
Some credit terms are 2/10, net 30 this denotes that a 2% discount will apply when the payment is made within the 10 days or else the account will be paid within 30 days

Answer 7

Chapter 22, Problem 1Q

a)

Summary Introduction

To determine: Whether the changes in credit terms can be made.

Answer 8

a)

Expert Solution

Explanation of Solution

Cash discounts:

Cash discounts are generally given to boost the early payments
To attract the customers by way of lowering the prices effectively.
Some credit terms are 2/10, net 30 this denotes that a 2% discount will apply when the payment is made within the 10 days or else the account will be paid within 30 days

Answer 9

a)

Expert Solution

Answer 10

a)

Expert Solution

Answer 11

Expert Solution

Answer 12

b)

Summary Introduction

To determine: Seasonal dating

b)

Expert Solution

Explanation of Solution

Seasonal dating arranges the invoice date or the date at which the discount and credit period starts, to a time during the own selling season of the buyers irrespective of the actual sale date.

Answer 13

b)

Summary Introduction

To determine: Seasonal dating

Answer 14

b)

Expert Solution

Explanation of Solution

Seasonal dating arranges the invoice date or the date at which the discount and credit period starts, to a time during the own selling season of the buyers irrespective of the actual sale date.

Answer 15

b)

Expert Solution

Answer 16

b)

Expert Solution

Answer 17

Expert Solution

Answer 18

c)

Summary Introduction

To determine: Aging schedule and DSO-days sales outstanding.

c)

Expert Solution

Explanation of Solution

An aging schedule divide the accounts receivable according to the time period that is how long the receivables been outstanding.

It provides a clear picture on the accounts receivables structure than which is provided by DSO. Whereas,

DSO is the measure of average length of time which is taken for customers to make payments on their credit purchases.

Answer 19

c)

Summary Introduction

To determine: Aging schedule and DSO-days sales outstanding.

Answer 20

c)

Expert Solution

Explanation of Solution

An aging schedule divide the accounts receivable according to the time period that is how long the receivables been outstanding.

It provides a clear picture on the accounts receivables structure than which is provided by DSO. Whereas,

DSO is the measure of average length of time which is taken for customers to make payments on their credit purchases.

Answer 21

c)

Expert Solution

Answer 22

c)

Expert Solution

Answer 23

Expert Solution

Answer 24

d)

Summary Introduction

To determine: Uncollected balances schedule.

d)

Expert Solution

Explanation of Solution

It shows the remaining uncollected receivables of each month as a % of month’s sales. By comparing this over time can be find the changes in the payment behavior of the customers, can avoid the misleading signals which are given by aging schedule and DSO when sales are seasonal.

Answer 25

d)

Summary Introduction

To determine: Uncollected balances schedule.

Answer 26

d)

Expert Solution

Explanation of Solution

It shows the remaining uncollected receivables of each month as a % of month’s sales. By comparing this over time can be find the changes in the payment behavior of the customers, can avoid the misleading signals which are given by aging schedule and DSO when sales are seasonal.

Answer 27

d)

Expert Solution

Answer 28

d)

Expert Solution

Answer 29

Expert Solution

Answer 30

e)

Summary Introduction

To determine: Discount interest, simple interest and add on interest.

e)

Expert Solution

Explanation of Solution

The case when the interest is not earned on interest is termed as simple interest
Discount interest is determined on the face value of the loan but it is paid in advance.
Add-on interest is termed as an interest and it is determined and added to the funds which are received to evaluate the face value of an installment loan.

Answer 31

e)

Summary Introduction

To determine: Discount interest, simple interest and add on interest.

Answer 32

e)

Expert Solution

Explanation of Solution

The case when the interest is not earned on interest is termed as simple interest
Discount interest is determined on the face value of the loan but it is paid in advance.
Add-on interest is termed as an interest and it is determined and added to the funds which are received to evaluate the face value of an installment loan.