FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Topic Video
Question
A company currently has the following accounts:
- Cash: $7,000
Accounts Receivable (net): $11,000- Short-Term Investment: $3,000
- Inventory: $3,000
- Current Liabilities: $5,000
The company has just learned that a $4,000 accounts receivable will not be collectible.
How will this change impact the
- It will decrease from 4.8 to 4.0.
- It will increase from 4.2 to 5.0.
- It will decrease from 4.2 to 3.4.
- It will increase from 4.8 to 5.6.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by stepSolved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- i need a solution :arrow_forwardThe managers of Finozest Ltd are worried about the level of the company's interest payments.Financial information for the last 30 months is given below. Details 2 years ago 2 years ago 1 year ago 1 year ago Current year Jan to June July to Dec Jan to June July to Dec Jan to June Total sales (K'000) 3294 3267 3430 3412 3583 Credit sales as a percentage of total sales 85 90 90 95 95 Average accounts receivable (K’000) 694 842 972 1148 1334 Average inventory: Raw materials (K'000) 95 90 110 115 120 Work in progress (K’000) 210 220 200 190 220 Finished goods (K’000) 115 90 100 95 80 Percentage of credit sales represented by customers taking the early settlement discount 50 45 45 40 40 Average overdraft interest rate for Finozest (% per year) 8.5 8.5 8.0 8.0 9 Finozest Ltd offers a cash discount of 2% for payment within seven days. The normal credit period is 45 days.In Groups allocated, required:a) Finozest's manager estimates that the interest cost of financing…arrow_forwardThe Branson Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 1.5 percent per period. Price per unit Cost per unit Unit sales per month Current Policy $59 $33 2,450 NPV New Policy $61 $33 2,575 Calculate the NPV of the decision to change credit policies. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)arrow_forward
- please show workingarrow_forwardA company reports the following: Sales $1,460,000 Average accounts receivable (net) 100,000 Determine (a) the accounts receivable turnover and (b) the number of days' sales in receivables. Round interim calculations to the nearest dollar and final answers to one decimal place. Assume a 365-day year. a. Accounts receivable turnover fill in the blank 1 b. Number of days' sales in receivables fill in the blank 2 daysarrow_forwardAxis Wells and Excavation (AWE) currently generates $198,000 in annual credit sales. AWE sells on terms of net 50, and its accounts receivable balance averages $11,000. AWE is considering a new credit policy with terms of net 25. Under the new policy, sales will decrease to $189,000, and accounts receivable will average $12,600. Compute the days sales outstanding (DSO) under the existing policy and the proposed policy. Assume there are 360 days in a year. Round your answers to the nearest whole number. DSOExisting: days DSONew: daysarrow_forward
- Cash and accounts receivable for Adams Company are provided below: Prior Year Cash $70,000 $50,000 Accounts receivable (net) 70,400 80,000 Based on this information, what is the amount and percentage of increase or decrease that would be shown with horizontal analysis? Enter a decrease using a minus sign before the amount and the percentage. Dollar Change Percent Change Account Current Year Cash Accounts Receivable % %arrow_forwardPlease provide answer in text (Without image)arrow_forwardAxis Wells and Excavation (AWE) currently generates $110,000 in annual credit sales. AWE sells on terms of net 50, and its accounts receivable balance averages $11,000. AWE is considering a new credit policy with terms of net 25. Under the new policy, sales will decrease to $104,000, and accounts receivable will average $13,000. Compute the days sales outstanding (DSO) under the existing policy and the proposed policy. Assume there are 360 days in a year. Round your answers to the nearest whole number. DSO Existing: days DSO New: daysarrow_forward
- A company has $50,000 in accounts receivable. The company estimates that 5% of accounts receivable will not be collected. What is the net realizable value of accounts receivable?arrow_forwardAverage account receivables-60 days, Inventories-85 days, Average account payable-55 days Company spends Rs.21, 00,000 annually and can earn 10% on its investments. (i) Find out cash cycle and cash turnover assuming 360 days in a year, (ii) Minimum amount of cash required to meet the payment. Also calculate the above, if inventory age is reduced to 75 days. What will be the savings for the company?arrow_forwardSuppose the 2022 financial statements of 3M Company report net sales of $23.1 billion. Accounts receivable (net) are $3.2 billion at the beginning of the year and $3.25 billion at the end of the year. Compute 3M’s accounts receivable turnover. - Accounts Recievable turnover ratio=? (times) Compute 3M’s average collection period for accounts receivable in days - Average collection period =? (days)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education