What is the days sales outstanding? b. What is the average amount of receivables? c. What would happen to average receivables if McDowell toughened its collection policy with the result that all non-discount customers paid on the 40th day?
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c) McDowell Industries sells on terms of 4/10, net 40. Total sales for the year are $825,500. Thirty percent of customers pay on the 15th day and take discounts; the other 70% pay, on average, 60 days after their purchases.
a. What is the days sales outstanding?
b. What is the average amount of receivables?
c. What would happen to average receivables if McDowell toughened its collection policy with the result that all non-discount customers paid on the 40th day?
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- Question no. 1: McDowell Industries sells on terms of 4/10, net 40. Total sales for the year are $825,500. Thirty percent of customers pay on the 15th day and take discounts; the other 70% pay, on average, 60 days after their purchases. What is the days sales outstanding? What is the average amount of receivables? What would happen to average receivables if McDowell toughened its collection policy with the result that all non-discount customers paid on the 40th day? Question no.2: International Industries sells on terms of 3/10, net 50. Gross sales last year were 5,662,500 and accounts receivable averaged 547,500. Half of International’s customers paid on the 15th day and took discounts. What are the nominal and effective costs of trade credit to International’s non-discount customers? (Hint: Calculate sales/day based on a 360-day year, then calculate average receivables of discount customers and then find the DSO for the non-discount customers. Question no.3: The D.J. Masson…Snider Industries sells on terms of 2/10, net 45. Total sales for the year are$1,500,000. Thirty percent of customers pay on the 10th day and take discounts; the other 70% pay, on average, 50 days after their purchases.a. What is the days sales outstanding?b. What is the average amount of receivables?c. What would happen to average receivables if Snider toughened its collection policy with the result that all nondiscount customers paid on the45th day?d) Inter accounts national Industries sells on terms of 3/10, net 50. Gross sales last year were 5,662,500 and receivable averaged 547,500. Half of International’s customers paid on the 15th day and took discounts. What are the nominal and effective costs of trade credit to International’s non-discount customers? (Hint: Calculate sales/day based on a 360-day year, then calculate average receivables of discount customers and then find the DSO for the non-discount customers.
- Dome Metals has credit sales of $342,000 yearly with credit terms of net 45 days, which is also the average collection period. Dome does not offer a discount for early payment, so its customers take the full 45 days to pay. a. What is the average receivables balance? (Use a 360-day year.)b. What is the receivables turnover? (Use a 360-day year.)Salma Corporation sells on terms of net/90. Their accounts receivable are on average 20 days past due. If annual credit sales are P800,000, what is the company’s average investment in accounts receivable? choose the letter of correct answera. P44,444.00b. P144,444.00c. P224,444.00d. P244,444.00e. P344,444.00Snider Industries sells on terms of 2/10, net 35. Total sales for the year are $600,000. Thirty percent of customers pay on the 10th day and take discounts; the other 70% pay, on average, 40 days after their purchases. Assume a 365-day year. What is the days sales outstanding? Do not round intermediate calculations. Round your answer to the nearest whole number. days What is the average amount of receivables? Do not round intermediate calculations. Round your answer to the nearest dollar. $ What would happen to average receivables if Snider toughened its collection policy with the result that all nondiscount customers paid on the 35th day? Do not round intermediate calculations. Round your answer to the nearest dollar. $
- ABC Corp. has net credit sales of P1,440,000 yearly with credit terms of n/30, which is also the average collection period. BECK does not offer discounts for early payment; thus, customers take the full 30 days to pay. (Use 360 days/year) 1.What is the average receivable balance? 2.What is the accounts receivable turnover?nider Industries sells on terms of 2/10, net 25. Total sales for the year are $600,000. Thirty percent of customers pay on the 10th day and take discounts; the other 70% pay, on average, 30 days after their purchases. Assume a 365-day year. What is the days sales outstanding? Do not round intermediate calculations. Round your answer to the nearest whole number. 24 days What is the average amount of receivables? Do not round intermediate calculations. Round your answer to the nearest dollar. $ What would happen to average receivables if Snider toughened its collection policy with the result that all non-discount customers paid on the 25th day? Do not round intermediate calculations. Round your answer to the nearest dollar.McEwan Industries sells on terms of 3/10, net 20. Total sales for the year are $971,000; 40% of the customers pay on the 10th day and take discounts, while the other 60% pay, on average, 90 days after their purchases. Assume 365 days in year for your calculations. What is the days sales outstanding? Round your answer to two decimal places. days What is the average amount of receivables? Do not round intermediate calculations. Round your answer to the nearest cent. $ What is the percentage cost of trade credit to customers who take the discount? If your answer is zero, enter zero. Round your answer to two decimal places. % What is the percentage cost of trade credit to customers who do not take the discount and pay in 90 days? If your answer is zero, enter zero. Do not round intermediate calculations. Round your answers to two decimal places. Nominal cost: % Effective cost: % What would happen to McEwan’s accounts receivable if it toughened up on its collection…
- Harper Corp.'s sales last year were $395,000, and its year-end receivables were $42,500. Harper sells on terms that call for customers to pay 30 days after the purchase, but many delay payment beyond Day 30. On average, how many days late do customers pay? Base your answer on this equation: DSO - Allowed credit period = Average days late, and use a 365-day year when calculating the DSO. O a. 9.74 b. 8.37 Oc8.81 Od. 7.95 Oe. 9.2711. Ingram Office Supplies, Inc., buys on terms of 2/15, net 50 days. It does not take discounts, and it typically pays on time, 50 days after the invoice date. Net purchases amount to $250,000 per year. On average, what is the dollar amount of costly trade credit (total credit – free credit) the firm receives during the year? (Assume a 365-day year, and note that purchases are net of discounts.) a. $22,534 b. $23,973 c. $26,610 d. $19,897 e. $29,247Assume that ABC Corporation pays for each purchase three (3) weeks after date of purchase. Maintains its inventory at a level equal to 9-day sales and are made on a 30-day charge basis.How long the cash cycle is and how many cash cycles it has in one year? Solution: 2. If ABC Corporation has annual credit sales of Ᵽ990,000 and its average accounts receivable is Ᵽ100,000, how many is its average collection period? Assuming that receivable turnover rate increases by 25%, how much would then be the estimated change in accounts receivable.Solution: 3. The following data are available from the records of ABC Corporation Annual sales Ᵽ 396,000Cost 70%Average inventory 50,000Based on the above information determine the following:a) Number of days sales in average inventoryb) Average inventory assuming that desired inventory turnover rateis 12x in one year. Solution: