PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Question
Chapter 30, Problem 38PS
a)
Summary Introduction
To determine: Company G’s current profit margin allows for
b)
Summary Introduction
To discuss: The way new credit scoring system would affect the profits if firm’s estimates of default rates are right.
c)
Summary Introduction
To discuss: Reasons of Company G estimates of default rates are not realized in real and consequences of such overestimating the accuracy of credit scoring scheme.
d)
Summary Introduction
To discuss: Effect on the assessment proposal when the customer has an existing account with Company G.
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Alpha Company's accounts receivable and allowance for doubtful accounts balances were RM100000 and RM14000 (credit) respectively, at the beginning of 2012. During 2012, a customer defaults on a RM12000 balance related to goods purchased during 2011. By the end of the year, the company had mad credit sales of RM2400000 and collected RM2200000 on account. Estimates 1 percent of its credit sales will default.
1.) Beltline Co. had credit sales of $100,000 for the year, and based on experience estimates that approximately 1% of these sales will be uncollectible. Under the percent of sales method,
a.the adjusting entry to record the uncollectible sales would involve a debit to Allowance for Doubtful Accounts and a credit to Bad Debt Expense.
b.the estimated uncollectible sales should not be recorded until there is firm evidence that a customer will not pay.
c.the estimated bad debt expense is $1,000.
d.the estimated bad debt expense is $10,000.
2.) Under the percentage of receivables method theory,
a.the majority of accounts receivable portion will not be collected.
b.some portion of the existing accounts receivable will not be collected.
c.the percentage of uncollectible accounts is calculated as Average Uncollectible Accounts divided by Average Accounts Receivable.
d."some portion of the existing accounts receivable will not be collected" and "the percentage of uncollectible…
During the current year, Giatras Electronics recorded credit sales of $710,000. Based on prior experience, it
estimates a 3.0 percent bad debt rate on credit sales Required: 1. Prepare journal entries for each of the
following transactions. a. On October 28 of the current year, an account receivable for $2,100 from a prior
year was determined to be uncollectible and was written off. b. At year-end, the appropriate bad debt
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Chapter 30 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 30 - Prob. 1PSCh. 30 - Components of working capital True or false? a....Ch. 30 - Inventory True or false? a. Just-in-time inventory...Ch. 30 - Inventory What are the trade-offs involved in the...Ch. 30 - Prob. 5PSCh. 30 - Prob. 6PSCh. 30 - Prob. 7PSCh. 30 - Prob. 8PSCh. 30 - Prob. 9PSCh. 30 - Credit terms Phoenix Lambert currently sells its...
Ch. 30 - Prob. 11PSCh. 30 - Prob. 12PSCh. 30 - Prob. 13PSCh. 30 - Prob. 14PSCh. 30 - Prob. 15PSCh. 30 - Credit policy How should your willingness to grant...Ch. 30 - Prob. 17PSCh. 30 - Prob. 18PSCh. 30 - Prob. 19PSCh. 30 - Prob. 20PSCh. 30 - Cash management Complete the passage that follows...Ch. 30 - Prob. 22PSCh. 30 - Prob. 23PSCh. 30 - Prob. 24PSCh. 30 - Prob. 25PSCh. 30 - Prob. 26PSCh. 30 - Prob. 27PSCh. 30 - Prob. 28PSCh. 30 - Prob. 29PSCh. 30 - Prob. 30PSCh. 30 - Prob. 31PSCh. 30 - Prob. 32PSCh. 30 - Prob. 34PSCh. 30 - Prob. 35PSCh. 30 - Prob. 36PSCh. 30 - After-tax yields Suppose you are a wealthy...Ch. 30 - Prob. 38PSCh. 30 - Prob. 39PS
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