Corporate Finance Plus MyLab Finance with Pearson eText -- Access Card Package (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
4th Edition
ISBN: 9780134408897
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 26, Problem 11P
The Mighty Power Tool Company has the following accounts on its books:
Customer Amount Owed (S) Age (days)
| ABC | 50,000 | 35 |
| DEF | 35,000 | 5 |
| GHI | 15,000 | 10 |
| KLM | 75,000 | 22 |
| NOP | 42,000 | 40 |
| QRS | 18,000 | 12 |
| TUV | 82,000 | 53 |
| WXY | 36,000 | 90 |
The firm extends credit on terms of 1/15, Net 30. Develop an aging schedule using 15-day increments through 60 days, and then indicate any accounts that have been outstanding for more than 60 days.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Assume that you start with a balance of $3900 on your credit card. During the first month you charge $400 and during the second month you charge $650. Assume that your credit card charges a 29% APR and that each month you make only the minimum payment of 2.5% of the balance . Complete the following table. Round to nearest cent
Table
Month 1 Previous balance- Finance charge - Purchase- Payments- New balance
Month 2 Previous balance- Finance charge - Purchase- Payments- New balance
Suppose your business has secured a line of credit and receives the accompanying statement of account for the month of October. The limit on your line of credit is $1000.00. You
receive daily interest of 1.6% p.a. on positive balances and pay daily interest of 8% p.a. on negative (line of credit) balances. Overdraft interest is 15% p.a. on the daily amount
exceeding your line of credit limit. There is a service charge of $5.00 for each transaction causing an overdraft or adding to an overdraft. Use this information to complete parts (a)
through (e) below.
E Click the icon to view the statement for the month of October.
.....
(a) Calculate the amount of interest earned.
Total interest earned = $
(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
(b) Calculate the amount of interest charged on the line of credit.
Total line of credit interest charged = $
Wyatt Oil extends credit on terms of 1/15, net 30.
The percentage of Wyatt's receivables that are past due is closest to:
A) 20.1%
B) 32.1%
C) 38.3%
D) 42.2%
Chapter 26 Solutions
Corporate Finance Plus MyLab Finance with Pearson eText -- Access Card Package (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
Ch. 26.1 - What is the firms cash cycle? How does it differ...Ch. 26.1 - How does working capital impact a firms value?Ch. 26.2 - Prob. 1CCCh. 26.2 - Prob. 2CCCh. 26.3 - Prob. 1CCCh. 26.3 - Prob. 2CCCh. 26.4 - What is accounts payable days outstanding?Ch. 26.4 - What are the costs of stretching accounts payable?Ch. 26.5 - What are the benefits and costs of holding...Ch. 26.5 - Prob. 2CC
Ch. 26.6 - Prob. 1CCCh. 26.6 - Prob. 2CCCh. 26 - Prob. 1PCh. 26 - Prob. 2PCh. 26 - Aberdeen Outboard Motors is contemplating building...Ch. 26 - Prob. 4PCh. 26 - Prob. 5PCh. 26 - Prob. 6PCh. 26 - The Fast Reader Company supplies bulletin board...Ch. 26 - Prob. 8PCh. 26 - Prob. 9PCh. 26 - Prob. 10PCh. 26 - The Mighty Power Tool Company has the following...Ch. 26 - What is meant by stretching the accounts payable?Ch. 26 - Prob. 13PCh. 26 - Your firm purchases goods from its supplier on...Ch. 26 - Use the financial statements supplied on the next...Ch. 26 - Prob. 16PCh. 26 - Which of the following short-term securities would...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Whole Leaves wants to upgrade their equipment, and on January 24 the company takes out a loan from the bank in the amount of $310,000. The terms of the loan are 6.5% annual interest rate, payable in three months. Interest is due in equal payments each month. Compute the interest expense due each month. Show the journal entry to recognize the interest payment on February 24, and the entry for payment of the short-term note and final interest payment on April 24. Round to the nearest cent if required.arrow_forwardMedwig Corporation has a DSO of 17 days. The company averages 3,500 in sales each day (all customers take credit). What is the companys average accounts receivable?arrow_forwardNeed answer the questionarrow_forward
- Nonearrow_forwardAssume that you start with a balance of $610 on your credit card.During the first month you charge $180 and make a payment of $400. During the second month you charge $100 and make a payment of $280. Assume that your credit card charges a 24% APR. Complete the following take table. Round your answer to the nearest cent. Table 1 month- Previous balance- Finance charge- Purchase- Payments- New balance 2 month- Previous balance- Finance charge- Purchase- Payments- New balance You have a credit card with an APR of 28%. The minimum amount payment is 12% of the balance. Suppose you have a balance of $1050. You decide to stop charging and make only the minimum payment. Complete the table. Round your answers to the nearest cent Table 1 month- Previous balance- Finance charge- Purchase- Payments- New balance 2 month- Previous balance- Finance charge- Purchase- Payments- New balancearrow_forwardCook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime rate plus 4%. The starting balance on October 1 was $9,100. On October 4 they made a payment of $1,800. On October 13 the business borrowed $2,300, and on October 19 they borrowed $4,800. If the current prime rate is 6%, what is the new balance (in \$) ? (Round your answer to the nearest cent.)arrow_forward
- Suppose your business has secured a line of credit and receives the accompanying statement of account for the month of July. The limit on your line of credit is $1000.00. You receive daily interest of 1.4% p.a. on positive balances and pay daily interest of 8% p.a. on negative (line of credit) balances. Overdraft interest is 16% p.a. on the daily amount exceeding your line of credit limit. There is a service charge of $5.00 for each transaction causing an overdraft or adding to an overdraft. Use this information to complete parts (a) through (e) below. E Click the icon to view the statement for the month of July (a) Calculate the amount of interest earned. Total interest earned = S (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (b) Calculate the amount of interest charged on the line of credit. Total line of credit interest charged = $ (Round the final answer to the nearest cent as needed. Round all intermediate…arrow_forwardFor the credit card account below, compute the average daily balance, the finance charge, and the account balance for the next billing. Assume the account is billed on the same date each month and that the annual interest rate is 18%. This credit card company calculates the finance charge on the average daily balance, but they consider each month of a year instead of using the number of days in the month. 12 Previous Balance: $1045 March 15 Billing Date March 23 Flowers $106 March 30 Payment $81 April 1 Groceries $86 April 8 Returns $50 April 11 Concert Tickets $138 Average Daily Balance: Finance Charge: Account Balance for the Next Billing:arrow_forwardCook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime rate plus 4%. The starting balance on October 1 was $9,500. On October 4 they made a payment of $1,400. On October 13 the business borrowed $2,500, and on October 19 they borrowed $4,400. If the current prime rate is 6%, what is the new balance (in $)? (Round your answer to the nearest cent.) taarrow_forward
- Do not give solution in imagearrow_forwardCook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime rate plus 4%. The starting balance on October 1 was $9,300. On October 4 they made a payment of $1,800. On October 13 the business borrowed $2,500, and on October 19 they borrowed $4,400. If the current prime rate is 6%, what is the new balance (in $)? (Round your answer to the nearest cent.) $ 11,145.475 Xarrow_forwardYou have an account with a $1500 credit limit that charges 13.25% interest using the average daily balance method. Assuming a 30-day month, you start with a balance of $350 on Day 1. On Day 5, you charge $100, and you pay $60 on Day 15. What is your average daily balance, assuming charges and payments begin the next day? Round your answer to 2 decimal places and do not include the dollar signarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Asset impairment explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=lWMDdtHF4ZU;License: Standard Youtube License