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Concept explainers
Case summary:
Individual R, a later back graduate, is arranging to go into the discount building supply trade with his brother, individual J, who majored in building construction. The firm would offer basically to common contractors, and it would begin working another January. Deals would be moderate amid the cold months, rise amid the spring, and at that point drop off once more within the summer, when modern construction in the region moderates. The terms of the deal are net 30 but, since of uncommon motivating forces, the brothers anticipate 30% of the customers (by dollar esteem) to pay on the 10th day taking after the sale, 50% to pay on the 40th day, and the remaining 20% to pay on the 70th day. No bad-debt misfortunes are expected since of individual J, the building development master, knows which temporary workers are having monetary issues.
To determine: The aging schedules for the end of March and the end of the June and whether it determines the clients’ payments pattern accurately.
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Chapter 22 Solutions
Intermediate Financial Management (MindTap Course List)
- Consider the following time series: a. Construct a time series plot. What type of pattern exists in the data? Is there an indication of a seasonal pattern? b. Use a multiple linear regression model with dummy variables as follows to develop an equation to account for seasonal effects in the data: Qtr1 = 1 if quarter 1, 0 otherwise; Qtr2 = 1 if quarter 2, 0 otherwise; Qtr3 = 1 if quarter 3, 0 otherwise. c. Compute the quarterly forecasts for next year.arrow_forwardHow to make an annual report through measures of position?arrow_forwardConsider the following time series data: Construct a time series plot. What type of pattern exists in the data? Use a multiple regression model with dummy variables as follows to develop an equation to account for seasonal effects in the data: Qtr1 = 1 if quarter 1, 0 otherwise; Qtr2 = 1 if quarter 2. 0 otherwise; Qtr3 = 1 if quarter 3, 0 otherwise. Compute the quarterly forecasts for next year based on the model you developed in part (b). Use a multiple regression model to develop an equation to account for trend and seasonal effects in the data. Use the dummy variables you developed in part (b) to capture seasonal effects and create a variable t such that t = 1 for quarter 1 in year 1, t = 2 for quarter 2 in year 1, … t = 12 for quarter 4 in year 3. Compute the quarterly forecasts for next year based on the model you developed in part (d). Is the model you developed in part (b) or the model you developed in part (d) more effective? Justify your answer.arrow_forward
- Then, prepare the journal entry assuming the payment is made within 10 days (the discount period).arrow_forwardConsider the following time series data: Compute MSE using the most recent value as the forecast for the next period. What is the forecast for month 8? Compute MSE using the average of all the data available as the forecast for the next period. What is the forecast for month 8? Which method appears to provide the better forecast?arrow_forwardThe first step in preparing the sales budget is toa. prepare a sales forecast.b. review the production budget carefully.c. assess the desired ending inventory of finished goods.d. talk with past customers.e. increase sales beyond the forecast level.arrow_forward
- An invoice dated January 25 with terms 2/10 -20 X. Find the final discount rate and the next payment date. The net payment date is 20 days after the final discount date. Assume it is not a leap year final dicount- net payment-arrow_forwardIdentify the inaccurate statement. O The primary objective of preparing financial plans is to estimate the future financing requirements in advance. O The cash budget contains revenue projections and expenses in the month in which they are expected to occur. O One of the key steps in the development of pro forma financial statements is to identify those assets and liabilities which increase spontaneously with net income that some, but not all, income statement and balance sheet items maintain a constant relationship with the level of sales." O "A fundamental premise of percent of sales method A Moving to another question will save this response. « < Questiorarrow_forwardThe units required in production each period are computed by which of the following methods? Select one: a. adding beginning inventory, budgeted sales, and desired ending inventory b. adding beginning inventory to budgeted sales and subtracting desired ending inventory c. adding budgeted sales to the beginning inventory and subtracting the desired ending inventory d. adding budgeted sales to the desired ending inventory and subtracting beginning inventoryarrow_forward
- Consider the following information: Suppliers’ payment period 40 days Receivables’ collection period 40 days Finished goods holding period 15 days Work – in progress holding period 10 days Raw materials inventory holding period 20 days b)What is the cash cycle? Select one: A. 35 days B. 45 days C. 30 days D. None of the abovearrow_forwardPlease answer both questionsarrow_forwarddifferentiate temporary account from permanent account and give example of it.Based on your understanding why it is important to close all temporary accounts at the end of the piscal year?arrow_forward
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