What reduction in average collection time would be needed to justify the lock-box system? (Use a 360-day year)

Q: a. Paradise Retailers, Inc. (PRI) determined that $1,500,000 is needed for cash transactions made…

A: Total cash needed (T) = $1,500,000Fixed charges (F) = $12.95Interest rate (I) = 4.5%

Q: can reduce the balance with its New York bank to $190,000 because it will do less business in New…

A: Information Provided: Additional cash balance = $270,000 Customers collection = $1,600,000 Cash…

Q: Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are…

A: Given, Average no of payments per day = 830Average value of payment = $780Variable lockbox feeAnnual…

Q: You are considering implementing a lockbox system for your firm. The system is expected to reduce…

A: One financial tool used by businesses to expedite payment collecting and processing is the lockbox…

Q: Sherman’s Sherbet currently takes about 6 days to collect and deposit checks from customers. A…

A: Collection average = $15,000 Days of collection = 6 Reduced time = 3 Interest rate = 0.02%

Q: Blooming Dales, Inc., has just set up a formal line of credit of $10 million with First Community…

A: The effective rate of interest is the rate that represents the actual cost of taking a loan or the…

Q: Sheila’s Society Clothing Manufacturer has collection centres around the country to speed up cash…

A: To calculate the amount of freed-up funds due to the changes in collection and disbursement times,…

Q: Zimmer Inc. typically receives 850 checks everyday and the average size of check is $700. The…

A: Number of checks received every day$850Average size of checks$700Cost per check$0.20Collection time…

Q: Community Financial provides lockbox services. They estimate that your firm can reduce its average…

A:

Q: ABC Company is considering to establish a line of credit with a local bank to make up for the cash…

A: Line of credit refers to the type of loan which should be repaid after a certain time period after…

Q: Bulldogs Inc. deals with various clients throughout the city and is attempting to collect its…

A: A lockbox is a bank-operated mailing address to which a business directs its clients' payments. The…

Q: ABC Company is considering to establish a line of credit with a local bank to make up for the cash…

A: Cost of line of credit = committed cost + interest cost.

Q: arm Insurance has collection centers across the country to speed up collections. The company also…

A: Collection period is the period required to recover the pending amount with customers and collect…

Q: Whitmer Inc. sells to customers all over the U.S., and all receipts come in to its headquarters in…

A: Average account receivable = $5 Million Annual interest rate=9.5% Reduction in Average accounts…

Q: HoneySing is a commercial enterprise which markets materials of construction to building…

A: Interest rate risk is arises due to fluctuation in interest rate in market due to various factors.

Q: Proposal #2 would establish local collection centers throughout the region to decrease the time it…

A: The answer is stated below:

Q: Compute the operating profit for Northwestern Bank. Compute the profit from Emily and Jacob,…

A: Given in the question:Total Deposits = $612,270,000Interest earnings on deposits = 4.1%Interest to…

Q: The company decided to borrow a one-time loan of $100,000 in Jan 2023 to launch a marketing campaign…

A: Monthly payment refers to an amount that is paid every month for the payment of loan amount…

Q: One coffee shop business in TX borrowed $3,000 and was scheduled to pay back $3,330 by paying 11% of…

A: Effective interest rates, which take compounding over a given time period into account, show the…

Q: From California to New York, legislative bodies across the United States are considering eliminating…

A: Non customers earn wage - $ 26/ hr ATM fees - $ 3.50 / transaction   Based on the given information,…

Q: Whitmer Inc. sells to customers all over the U.S., and all receipts come in to its headquarters in…

A: Lockbox System - It is a technique of management of mailing float. There are certain advantage of…

Q: firm a recieves an average of 1000 checks a day. the average check amount is 400. the collection…

A: A lockbox system is an arrangement in which a bank-operated mailing address is provided by banks to…

Q: Knob, Inc., is a nationwide distributor of furniture hardware. The company now uses a central…

A: As per the given information: Credit sales - $198.00 million Flat fee of First National - $150,000…

Q: annual net pretax benefits

A: Calculate the annual net pretax benefits of establishing a lockbox system, we need to consider the…

Q: It takes Cookie Cutter Modular Homes, Incorporated, about six days to receive and deposit checks…

A: Number of days it takes to recieve and deposit checks - 6 Number of days it is expected to be…

Q: Reduction in mailing time = 1.5 day Reduction in clearing time = 1.5 day Reduction in firm…

A: Cost associated with lockbox=Number of payments * Fees / Daily interest rate

Q: The firm's bank charges $18 per wire and $0.50 per EDT. The EDT takes one day longer to clear. The…

A: Since  The minimum transfer balance= TBAL TBAL=Incremental costDS×(K-ECR(1-RRR))365 Where: DS= Days…

Q: What would be the net daily benefit of opening the new account? (

A: Net daily benefit refers to the total benefit earned by the company or person in a period of 24…

Q: Bulldogs Inc. deals with various clients throughout the city and is attempting to collect its…

A: Total receipts=Daily receipts×Average amount=300×P5,000=P1,500,000

Q: Bridgette Inc. maintains a cash buffer for unexpected cash outlays for the year amounting to 3,000.…

A: Unexpected annual cash outlay is 3,000 Transaction cost per transaction is P15 Annual interest rate…

Q: ABC Company is considering to establish a line of credit with a local bank to make up for the cash…

A: Interest cost=$280,100∗60%*0.60%∗3/(1−5%).=$3,184

Q: BA collects its receivables after 25 days on the average, so that they amount to P75,000. A proposal…

A: Account receivable are payments due to the customers and they are yet to be received and amount of…

Q: Often times, banks have special offers for new customers. Currently, Bank of America is offering new…

A: Future Value = Present Value (1 + r)n

Q: Theta Corporation receives checks from its customers. The total check value averages P700,000 each…

A: Benefit or cost to be calculated on yearly basis, which means we have now received early and we can…

Q: (B) Receivables: Credit Terms: ABC sold boxes of candles at P1,000 each. Each box costs P750. Daily…

A: Accounts receivable refers to the balance amount to the firm for goods and services delivered but…

Q: Mama Inc. maintains a cash buffer for unexpected cash outlays for the year amounting to 3,000. Bank…

A: Cash is required in all business activities and at all levels. Therefore, cash is an inseparable…

Q: Wells Fargo Bank lent a newly graduated engineer $1,000 at i = 5 % per year for 4 years to buy home…

A: Here, Lending Amount is $1,000 Interest Rate is 5% Time Period is 4 years Equivalent Net Cash Flow…

Q: General Products writes checks that average $33,000 daily. These checks take an average of 6 days to…

A: Data given: Average payments received daily = $35,000 Float time = 3 days Float time is the time…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.