Person R and his brother person J planned to start a business of wholesale building supply. Term of sale is net 30 and the brothers are expected to 30% of the customers to pay on the 10 th day followed by the sale and 50% on the 40 th day, and 20% of the customers on 70 th day. Characters in the case: Person R Person J To discuss: The expected days sales outstanding (DSO) of the firm.

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Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 22, Problem 2MC

1)

Summary Introduction

Case summary:

Person R and his brother person J planned to start a business of wholesale building supply.

Term of sale is net 30 and the brothers are expected to 30% of the customers to pay on the 10^th day followed by the sale and 50% on the 40^th day, and 20% of the customers on 70^th day.

Characters in the case:

Person R

Person J

To discuss: The expected days sales outstanding (DSO) of the firm.

b)

Summary Introduction

To discuss: The expected average daily sales (ADS).

c)

Summary Introduction

To discuss: The expected average accounts receivables.

d)

Summary Introduction

To determine: The receivables balance to be financed and the accounts receivable, retained earnings, notes payable at the end of 1 year when the notes payable are used to finance the receivables investment.

e)

Summary Introduction

To determine: The annual dollar cost of carrying the receivables

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Students have asked these similar questions

Use the "percent of sales method" of preparing pro forma financial statements to determine the projection for next year's accounts receivable. Make the following assumptions: current year's sales are $55,750,000; current year's cost of goods sold is $25,350,000; sales are expected to rise by 25%, The firm's investment in accounts receivable in the current year is $12,600,000. The firm's marginal tax rate is 35%. What is the projection for next year's accounts receivable? $10,320,000 $11,345,000 O $15,750,000 $8,772,000

Your company forecasts that next year's sales will be $78.00 million and the Days Sales Outstanding (DSO) ratio will be 24.84. What is the forecasted accounts receivable for next year? Note: your answer should in millions of dollars..

Suppose a firm makes purchases of $3.65 million per year under terms of 2/10, net 30, and takes discounts. What is the average amount of accounts payable net of discounts? (Assume the $3.65 million of purchases is net of discounts—that is, gross purchases are $3,724,489.80, discounts are $74,489.80, and net purchases are $3.65 million.) Is there a cost of the trade credit the firm uses? If the firm did not take discounts but did pay on the due date, what would be its average payables and the nominal and effective costs of this nonfree trade credit? What would be the firm’s nominal and effective costs of not taking discounts if it could stretch its payments to 40 days?

Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 22, Problem 2MC

1)

Summary Introduction

Case summary:

Person R and his brother person J planned to start a business of wholesale building supply.

Term of sale is net 30 and the brothers are expected to 30% of the customers to pay on the 10^th day followed by the sale and 50% on the 40^th day, and 20% of the customers on 70^th day.

Characters in the case:

Person R

Person J

To discuss: The expected days sales outstanding (DSO) of the firm.

b)

Summary Introduction

To discuss: The expected average daily sales (ADS).

c)

Summary Introduction

To discuss: The expected average accounts receivables.

d)

Summary Introduction

To determine: The receivables balance to be financed and the accounts receivable, retained earnings, notes payable at the end of 1 year when the notes payable are used to finance the receivables investment.

e)

Summary Introduction

To determine: The annual dollar cost of carrying the receivables

Expert Solution & Answer

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 22, Problem 2MC

1)

Summary Introduction

Case summary:

Person R and his brother person J planned to start a business of wholesale building supply.

Term of sale is net 30 and the brothers are expected to 30% of the customers to pay on the 10^th day followed by the sale and 50% on the 40^th day, and 20% of the customers on 70^th day.

Characters in the case:

Person R

Person J

To discuss: The expected days sales outstanding (DSO) of the firm.

b)

Summary Introduction

To discuss: The expected average daily sales (ADS).

c)

Summary Introduction

To discuss: The expected average accounts receivables.

d)

Summary Introduction

To determine: The receivables balance to be financed and the accounts receivable, retained earnings, notes payable at the end of 1 year when the notes payable are used to finance the receivables investment.

e)

Summary Introduction

To determine: The annual dollar cost of carrying the receivables

Expert Solution & Answer

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Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 22, Problem 2MC

1)

Summary Introduction

Case summary:

Person R and his brother person J planned to start a business of wholesale building supply.

Term of sale is net 30 and the brothers are expected to 30% of the customers to pay on the 10^th day followed by the sale and 50% on the 40^th day, and 20% of the customers on 70^th day.

Characters in the case:

Person R

Person J

To discuss: The expected days sales outstanding (DSO) of the firm.

b)

Summary Introduction

To discuss: The expected average daily sales (ADS).

c)

Summary Introduction

To discuss: The expected average accounts receivables.

d)

Summary Introduction

To determine: The receivables balance to be financed and the accounts receivable, retained earnings, notes payable at the end of 1 year when the notes payable are used to finance the receivables investment.

e)

Summary Introduction

To determine: The annual dollar cost of carrying the receivables

Expert Solution & Answer

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Answer 5

Chapter 22, Problem 2MC

1)

Summary Introduction

Case summary:

Person R and his brother person J planned to start a business of wholesale building supply.

Term of sale is net 30 and the brothers are expected to 30% of the customers to pay on the 10^th day followed by the sale and 50% on the 40^th day, and 20% of the customers on 70^th day.

Characters in the case:

Person R

Person J

To discuss: The expected days sales outstanding (DSO) of the firm.

b)

Summary Introduction

To discuss: The expected average daily sales (ADS).

c)

Summary Introduction

To discuss: The expected average accounts receivables.

d)

Summary Introduction

To determine: The receivables balance to be financed and the accounts receivable, retained earnings, notes payable at the end of 1 year when the notes payable are used to finance the receivables investment.

e)

Summary Introduction

To determine: The annual dollar cost of carrying the receivables

Answer 6

Chapter 22, Problem 2MC

1)

Summary Introduction

Case summary:

Person R and his brother person J planned to start a business of wholesale building supply.

Term of sale is net 30 and the brothers are expected to 30% of the customers to pay on the 10^th day followed by the sale and 50% on the 40^th day, and 20% of the customers on 70^th day.

Characters in the case:

Person R

Person J

To discuss: The expected days sales outstanding (DSO) of the firm.

Answer 7

Chapter 22, Problem 2MC

1)

Summary Introduction

Case summary:

Person R and his brother person J planned to start a business of wholesale building supply.

Term of sale is net 30 and the brothers are expected to 30% of the customers to pay on the 10^th day followed by the sale and 50% on the 40^th day, and 20% of the customers on 70^th day.

Characters in the case:

Person R

Person J

To discuss: The expected days sales outstanding (DSO) of the firm.

Answer 8

b)

Summary Introduction

To discuss: The expected average daily sales (ADS).

Answer 9

b)

Summary Introduction

To discuss: The expected average daily sales (ADS).

Answer 10

c)

Summary Introduction

To discuss: The expected average accounts receivables.

Answer 11

c)

Summary Introduction

To discuss: The expected average accounts receivables.

Answer 12

d)

Summary Introduction

To determine: The receivables balance to be financed and the accounts receivable, retained earnings, notes payable at the end of 1 year when the notes payable are used to finance the receivables investment.

Answer 13

d)

Summary Introduction

To determine: The receivables balance to be financed and the accounts receivable, retained earnings, notes payable at the end of 1 year when the notes payable are used to finance the receivables investment.

Answer 14

e)

Summary Introduction

To determine: The annual dollar cost of carrying the receivables

Answer 15

e)

Summary Introduction

To determine: The annual dollar cost of carrying the receivables

Answer 16

Expert Solution & Answer

Answer 17

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Answer 18

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Answer 19

Ch. 22 - Prob. 1Q Ch. 22 - Prob. 2Q Ch. 22 - Is it true that if a firm calculates its days...Ch. 22 - Firm A had no credit losses last year, but 1% of...Ch. 22 - Indicate by a (+), (), or (0) whether each of the...Ch. 22 - Cost of Bank Loan On March 1, Minnerly Motors...Ch. 22 - Cost of Bank Loan Mary Jones recently obtained an...Ch. 22 - Del Hawley, owner of Hawleys Hardware, is...Ch. 22 - Gifts Galore Inc. borrowed 1.5 million from...Ch. 22 - Relaxing Collection Efforts The Boyd Corporation...

Solution Summary: The author explains that Person R and his brother person J planned to start a business of wholesale building supply.

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To discuss: The expected average daily sales (ADS).

To discuss: The expected average accounts receivables.

To determine: The receivables balance to be financed and the accounts receivable, retained earnings, notes payable at the end of 1 year when the notes payable are used to finance the receivables investment.

To determine: The annual dollar cost of carrying the receivables

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