EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 3, Problem 3P
Summary Introduction
To determine: Average accounts receivable balance.
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TMRW Co. has annual credit sales of $1,080,000 and an average collection period of 32 days in 2010. Assume a 360-day year. What is the company’s average accounts receivable balance? Accounts receivable are equal to the average daily credit sales times the average collection period.
XYZ company has annual credit sales of $1,440,000 and an average collection period of 45 days in 2005. Assume a 360 day year. What is the company’s average accounts receivable balance? Accounts receivable are equal to the average daily credit sales time the average collection period.
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Chapter 3 Solutions
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Ch. 3 - Prob. 1QTDCh. 3 - Prob. 2QTDCh. 3 - Prob. 3QTDCh. 3 - Prob. 4QTDCh. 3 - Prob. 5QTDCh. 3 - Prob. 6QTDCh. 3 - Prob. 7QTDCh. 3 - Prob. 8QTDCh. 3 - Prob. 9QTDCh. 3 - Prob. 10QTD
Ch. 3 - Prob. 11QTDCh. 3 - Prob. 12QTDCh. 3 - Prob. 13QTDCh. 3 - Prob. 14QTDCh. 3 - Prob. 1PCh. 3 - Prob. 2PCh. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Prob. 5PCh. 3 - Prob. 6PCh. 3 - Prob. 7PCh. 3 - Prob. 8PCh. 3 - Prob. 9PCh. 3 - Prob. 10PCh. 3 - Prob. 11PCh. 3 - Prob. 12PCh. 3 - Prob. 13PCh. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - Prob. 16PCh. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Prob. 21P
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- Berry Farms has an accounts receivable balance at the end of 2018 of $425,650. The net credit sales for the year are $924,123. The balance at the end of 2017 was $378,550. What is the number of days sales in receivables ratio for 2018 (round all answers to two decimal places)?arrow_forwardSouth Rims has an accounts receivable balance at the end of 2018 of $357,470. The net credit sales for the year are $769,346. The balance at the end of 2017 was $325,300. What is the accounts receivable turnover rate for 2018 (rounded to two decimal places)? A. 2.02 times B. 2.25 times C. 2.15 times D. 1.13 timesarrow_forwardA firm had credit sales of $15,750,000 last year and its days sales outstanding was 65 days. What was its average receivables balance, based on a 365-day year? A) $4,389,657 B) $2,804,795 C) $1,294,521 D) $3,412,500 E)$7,269,231arrow_forward
- Knight Roundtable Co. had annual credit sales of $1,080,000 and an average collection period of 32 days in 2018. Assume a 360-day year. What were the company’s average accounts receivable balance? Accounts receivable are equal to the average daily credit sales times the average collection period. Fisk Corporation is trying to improve its inventory control system and has installed an online computer at its retail stores. Fisk anticipates sales of 49,000 units per year, an ordering cost of $8 per order, and carrying costs of $1.60 per unit.arrow_forwardYour company had net sales of $100,000 over the past year. One quarter of the sales were credit sales. During that time, average receivables were $5,000. The accounts receivable balance at the end of the year was $5,000. What was the average collection period? What is the average age of receivables (same answer!)? (Assume a 360-day year) O 18 days O 27 days O 36 days O 72 days O 60 daysarrow_forwardThe Malibu Corporation has annual credit sales of $36 million. The average collection period is 38 days. What is the average investment in accounts receivable as shown on the balance sheet?arrow_forward
- South Rims has an accounts receivable balance at the end of 2018 of $357,470. The net credit salesfor the year are $769,346. The balance at the end of 2017 was $325,300. What is the accounts receivableturnover rate for 2018 (rounded to two decimal places)?arrow_forwardMurtaugh Manufacturing sells on terms of 2/15, net 40. Total annual sales are $950,000. 40% of the customers pay on the 15th day and take discounts, and the remainder pay, on average, 50 days after their purchases. All sales and receivables are recorded net of discounts, regardless of whether or not discounts are actually taken. What is the firm's accounts receivable balance, based on a 365-day year? Select one: a. $88,526 b. $85,123 c. $93,699 d. $82,708arrow_forwardA company has annual sales of $5,210,000 and its average daily accounts receivable is $377,000. What is the average days' sales in receivables? Assume 365 days per year.arrow_forward
- The Dire Corporation has an inventory conversion period of 75 days, a receivables collection period of 38 days, and a payables deferral period of 30 days. What is the length of the firm’s cash conversion cycle? If Dire’s annual sales are $3,421,875 and all sales are on credit, what is the firm’s investment in accounts receivable? How many times per year does Dire turn over its inventory?arrow_forwardThe following information was extracted from ABC Ltd’s financial statements for the year ended 31 December 2019. Sales on 30 November 2019 were K100 million and K110 million on 31 December 2019. For the year 2020, sales are expected to double at a constant monthly rate. 80% of the sales made are on account; the remainder on cash. From past experience, 5% of the receivables have turned out to be irrecoverable. Credit customers pay as follows: 75% in the month following the sale; 15% two months after the sale month. Inventory levels are maintained at 20% of the following month’s sales. Accounts payables are at settled at 30 days after purchase. Required: Prepare a cash forecast for the three-month period from January to March 2020.arrow_forwardThe following information was extracted from ABC Ltd’s financial statements for the year ended 31 December 2019. Sales on 30 November 2019 were K100 million and K110 million on 31 December 2019. For the year 2020, sales are expected to double at a constant monthly rate. 80% of the sales made are on account; the remainder on cash. From past experience, 5% of the receivables have turned out to be irrecoverable. Credit customers pay as follows: 75% in the month following the sale; 15% two months after the sale month. Inventory levels are maintained at 20% of the following month’s sales. Accounts payables are at settled at 30 days after purchase. Required: Prepare a collections schedule for the three-month period from January to March 2020.arrow_forward
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