EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 16, Problem 26P
a)
Summary Introduction
To determine: The annual lost cash discount.
b)
Summary Introduction
To determine: The annual penalties.
c)
Summary Introduction
To determine: The annual financing cost.
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Gerard Appliances, Inc., is a small manufacturer of washing machines and dryers. It sells its products to large, established discount retailers that market the appliances under their own names. Gerard generally sells the appliances on trade credit terms of n/60, but if a customer wants a longer term, it will accept a note with a term of up to nine months. At present, the company is having cash flow troubles and needs $10 million immediately. Its Cash balance is $400,000, its Accounts Receivable balance is $4.6 million, and its Notes Receivable balance is $7.4 million.
(a) How might Gerard Appliances use its accounts receivable and notes receivable to raise the cash it needs?
(b) What are its prospects for raising the needed cash?
On April 1, 2024, Macomb Corporation realizes that one of its main suppliers is having difficulty meeting delivery schedules, which is
hurting Macomb's business. The supplier explains that it has a temporary lack of funds that is slowing its production cycle. Macomb
agrees to lend $470,000 to its supplier using a 12-month, 11% note.
Required:
Record the following transactions for Macomb Corporation:
1. The loan of $470,000 and acceptance of the note receivable on April 1, 2024.
2. The adjusting entry for accrued interest on December 31, 2024.
3. Cash collection of the note and interest on April 1, 2025.
On April 1, 2024, Washtenaw Corporation realizes that one of its main suppliers is having difficulty meeting delivery schedules, which is
hurting Washtenaw's business. The supplier explains that it has a temporary lack of funds that is slowing its production cycle.
Washtenaw agrees to lend $480,000 to its supplier using a 12-month, 12% note.
Required:
Record the following transactions for Washtenaw Corporation:
1. The loan of $480,000 and acceptance of the note receivable on April 1, 2024.
2. The adjusting entry for accrued interest on December 31, 2024.
3. Cash collection of the note and interest on April 1, 2025.
(If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
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Journal entry worksheet
1
Record the loan of $480,000 and acceptance of the note receivable on April 1,
2024.
2
Note: Enter debits before credits.
Date
April 01, 2024
Record entry
Credit
>
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Chapter 16 Solutions
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Ch. 16 - Prob. 1QTDCh. 16 - Prob. 2QTDCh. 16 - Prob. 3QTDCh. 16 - Prob. 4QTDCh. 16 - Prob. 5QTDCh. 16 - Prob. 6QTDCh. 16 - Prob. 7QTDCh. 16 - Prob. 8QTDCh. 16 - Prob. 9QTDCh. 16 - Prob. 10QTD
Ch. 16 - Prob. 11QTDCh. 16 - Prob. 12QTDCh. 16 - Prob. 13QTDCh. 16 - Prob. 14QTDCh. 16 - Prob. 15QTDCh. 16 - Prob. 16QTDCh. 16 - Prob. 17QTDCh. 16 - Prob. 18QTDCh. 16 - Prob. 19QTDCh. 16 - Prob. 20QTDCh. 16 - Prob. 21QTDCh. 16 - Prob. 22QTDCh. 16 - Prob. 23QTDCh. 16 - Prob. 24QTDCh. 16 - Prob. 1PCh. 16 - Prob. 2PCh. 16 - Prob. 3PCh. 16 - Prob. 4PCh. 16 - Prob. 5PCh. 16 - Prob. 6PCh. 16 - Prob. 7PCh. 16 - Prob. 8PCh. 16 - Prob. 9PCh. 16 - Prob. 10PCh. 16 - Prob. 11PCh. 16 - Prob. 12PCh. 16 - Prob. 13PCh. 16 - Prob. 14PCh. 16 - Prob. 15PCh. 16 - Prob. 16PCh. 16 - Prob. 17PCh. 16 - Prob. 18PCh. 16 - Prob. 19PCh. 16 - Prob. 20PCh. 16 - Prob. 21PCh. 16 - Prob. 22PCh. 16 - Prob. 23PCh. 16 - Prob. 24PCh. 16 - Prob. 25PCh. 16 - Prob. 26PCh. 16 - Prob. 27PCh. 16 - Prob. 28PCh. 16 - Prob. 29PCh. 16 - Prob. 30PCh. 16 - Prob. 31PCh. 16 - Prob. 32PCh. 16 - Prob. 33PCh. 16 - Prob. 34P
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