Bugle Boy Company has an opportunity cost of funds of 10 percent and a credit policy...
Bugle Boy Company has an opportunity cost of funds of 10 percent and a credit policy based on net 45 days. If all of its customers adhere to the stated terms and annual sales increase from $4.04 million to $5.98 million, what will be the increased cost of funds tied up in accounts receivable?
Homework Answers
Average accounts receivable = annual sales * average days outstanding/365
Average accounts receivable (new) = 5.98 million * 45/365 = $737,260.27
Average accounts receivable (old) = 4.04 million * 45/365 = $498,082.19
Increased investment in receivables = $737,260.27 - $498,082.19
= $239,178.08
Thus increased cost of funds tied up in accounts receivable = 10% of $239,178.08
= $23,917.81
(This can be rounded off to $23,918)
Add Answer to:
Bugle Boy Company has an opportunity cost of funds of 10 percent
and a credit policy...
Bugle Boy Company has an opportunity cost of funds of 10 percent and a credit policy...
Bugle Boy Company has an opportunity cost of funds of 10 percent and a credit policy based on net 45 days. If all of its customers adhere to the stated terms and annual sales increase from $3.96 million to $5.82 million, what will be the increased cost of funds tied up in accounts receivable? (Use 365 days in a year. Do not round intermediate calculations. Round the final answer to the neares whole dollar. Enter answer in whole dollar not...
Drop-down options: (collection policy, terms of credit, credit standards), (29.8 days, 32.0 days, 42.6 days, 36.2...
Drop-down options: (collection policy, terms of credit, credit
standards), (29.8 days, 32.0 days, 42.6 days, 36.2 days),
($58,370,082, $55,590,554, $47,251,971, $61,149,609)
8. Accounts receivable Effective credit management involves establishing credit standards for extending credit to customers, determining the company's terms of credit, and setting up procedures for invoicing and collecting past-due accounts. The following statement refers to a credit management policy. Select the best term to complete the sentence. The minimum financial strength a customer must have to be granted...
Problem 7-25 Credit policy decision with changing variables (LO7-4) points eBook Dome Metals has credit sales of $3...
Problem 7-25 Credit policy decision with changing variables (LO7-4) points eBook Dome Metals has credit sales of $342,000 yearly with credit terms of net 45 days, which is also the average collection period. Assume the firm adopts new credit terms of 2/18, net 45 and all customers pay on the last day of the discount period. Any reduction in accounts receivable will be used to reduce the firm's bank loan which costs 10 percent. The new credit terms will increase...
Henderson Office Supplies is considering a more liberal credit policy to increase sales, but it expects that 5 percent o...
Henderson Office Supplies is considering a more liberal credit policy to increase sales, but it expects that 5 percent of the new accounts will be uncollectible. Collection costs are 5 percent of new sales, production costs are 80 percent of sales, and accounts receivable turnover is five times. Assume an increase in sales of $79,000. No other asset buildup will be required to service the new accounts. a. What is the level of investment in accounts receivable to support this...
The Boyd Corporation has annual credit sales of $1.93 million. Current expenses for the collection department...
The Boyd Corporation has annual credit sales of $1.93 million. Current expenses for the collection department are $41,000, bad-debt losses are 1.7%, and the days sales outstanding is 30 days. The firm is considering easing its collection efforts such that collection expenses will be reduced to $24,000 per year. The change is expected to increase bad-debt losses to 2.7% and to increase the days sales outstanding to 45 days. In addition, sales are expected to increase to $1,955,000 per year....
I need help with this question. it is an Accounting question . Attempts: 0 Keep the...
I need help with this question.
it is an Accounting question .
Attempts: 0 Keep the Highest: 0/3 1. Problem 22-05 (Relaxing Collection Efforts) eBook 1 Problem Walk-Through Relaxing Collection Efforts The Boyd Corporation has annual credit sales of $2.72 million. Current expenses for the collection department are $45,000, bad-debt losses are 2%, and the days sales outstanding is 30 days. The firm is considering easing its collection efforts such that collection expenses will be reduced to $27,000 per year....
Drop-down options: (credit standards, terms of credit, collection policy), (dollar value). 8. Accounts receivable Effective credit...
Drop-down options: (credit standards, terms of credit,
collection policy), (dollar value).
8. Accounts receivable Effective credit management involves establishing credit standards for extending credit to customers, determining the company's terms of credit, and setting up procedures for invoicing and collecting past-due accounts. The following statement refers to a credit management policy. Select the best term to complete the sentence. The conditions of the credit sale, including cash discounts and due dates, are indicated by the company's Consider the case of...
3. Accounts receivable Effective credit management involves establishing credit standards for extending credit to customers, determining...
3. Accounts receivable Effective credit management involves establishing credit standards for extending credit to customers, determining the company's credit terms, and setting up procedures for invoicing and collecting past-due accounts. The following statement refers to a credit management policy. Select the best term to complete the sentence. The conditions of the credit sale, including cash discounts and due dates, are indicated by the company's Consider the case of Osato Chemicals Inc.: Osato Chemicals Inc.'s CFO has decided to take a...
Henderson Office Supplies is considering a more liberal credit policy to increase sales, but it expects...
Henderson Office Supplies is considering a more liberal credit policy to increase sales, but it expects that 10 percent of the new accounts will be uncollectible. Collection costs are 4 percent of new sales, production costs are 76 percent of sales and accounts receivable turnover is four times. Assume an increase in sales of $78,000. No other asset buildup will be required to service the new accounts. a. What is the level of investment in accounts receivable to support this...
The Boyd Corporation has annual credit sales of $2.48 million. Current expenses for the collection department are $35,00...
The Boyd Corporation has annual credit sales of $2.48 million. Current expenses for the collection department are $35,000, bad-debt losses are 1.7%, and the days sales outstanding is 30 days. The firm is considering easing its collection efforts such that collection expenses will be reduced to $27,000 per year. The change is expected to increase bad-debt losses to 2.7% and to increase the days sales outstanding to 45 days. In addition, sales are expected to increase to $2,505,000 per year....
Bugle Boy Company has an opportunity cost of funds of 10 percent and a credit policy based on net 45 days. If all of its customers adhere to the stated terms and annual sales increase from $3.96 million to $5.82 million, what will be the increased cost of funds tied up in accounts receivable? (Use 365 days in a year. Do not round intermediate calculations. Round the final answer to the neares whole dollar. Enter answer in whole dollar not...
Drop-down options: (collection policy, terms of credit, credit
standards), (29.8 days, 32.0 days, 42.6 days, 36.2 days),
($58,370,082, $55,590,554, $47,251,971, $61,149,609)
8. Accounts receivable Effective credit management involves establishing credit standards for extending credit to customers, determining the company's terms of credit, and setting up procedures for invoicing and collecting past-due accounts. The following statement refers to a credit management policy. Select the best term to complete the sentence. The minimum financial strength a customer must have to be granted...
Problem 7-25 Credit policy decision with changing variables (LO7-4) points eBook Dome Metals has credit sales of $342,000 yearly with credit terms of net 45 days, which is also the average collection period. Assume the firm adopts new credit terms of 2/18, net 45 and all customers pay on the last day of the discount period. Any reduction in accounts receivable will be used to reduce the firm's bank loan which costs 10 percent. The new credit terms will increase...
I need help with this question.
it is an Accounting question .
Attempts: 0 Keep the Highest: 0/3 1. Problem 22-05 (Relaxing Collection Efforts) eBook 1 Problem Walk-Through Relaxing Collection Efforts The Boyd Corporation has annual credit sales of $2.72 million. Current expenses for the collection department are $45,000, bad-debt losses are 2%, and the days sales outstanding is 30 days. The firm is considering easing its collection efforts such that collection expenses will be reduced to $27,000 per year....
Drop-down options: (credit standards, terms of credit,
collection policy), (dollar value).
8. Accounts receivable Effective credit management involves establishing credit standards for extending credit to customers, determining the company's terms of credit, and setting up procedures for invoicing and collecting past-due accounts. The following statement refers to a credit management policy. Select the best term to complete the sentence. The conditions of the credit sale, including cash discounts and due dates, are indicated by the company's Consider the case of...
3. Accounts receivable Effective credit management involves establishing credit standards for extending credit to customers, determining the company's credit terms, and setting up procedures for invoicing and collecting past-due accounts. The following statement refers to a credit management policy. Select the best term to complete the sentence. The conditions of the credit sale, including cash discounts and due dates, are indicated by the company's Consider the case of Osato Chemicals Inc.: Osato Chemicals Inc.'s CFO has decided to take a...
Henderson Office Supplies is considering a more liberal credit policy to increase sales, but it expects that 10 percent of the new accounts will be uncollectible. Collection costs are 4 percent of new sales, production costs are 76 percent of sales and accounts receivable turnover is four times. Assume an increase in sales of $78,000. No other asset buildup will be required to service the new accounts. a. What is the level of investment in accounts receivable to support this...
Most questions answered within 3 hours.
-
If for a test the P-value is between 0.0025 and 0.005, what
conclusion can you draw?...
asked 8 minutes ago -
Using Python. Write a function clean2(aList) that takes a list
of integers aList as argument, and...
asked 13 minutes ago -
Intrapreneurship is defined as the
development of an enterprise culture with an existing (Nandan,
2009). An...
asked 27 minutes ago -
QUESTION 1 Tamiflu is a drug used to treat influenza. A study
found that Tamiflu reduced...
asked 31 minutes ago -
Which of the following would be less likely to be used to
allocate factory overhead when...
asked 37 minutes ago -
Transverse pulses travel with a speed of 195 m/s along a taut
copper wire whose diameter...
asked 36 minutes ago -
Sampling for Engineers Homework question 11.51
Suppose that Y1;Y2;Y3;Y4 denote a random sample from a
Poisson(θ)...
asked 39 minutes ago -
Which of the following is cleaved by regulated intramembrane
proteolysis (RIP)? Select any/all answers that apply....
asked 39 minutes ago -
Random characters You decide to create a program characters.py
that fills a two-dimensional list with random...
asked 51 minutes ago -
What are the major sources of error in your determination of the
molar mass? Select all...
asked 55 minutes ago -
A. Suppose your manager indicates that for a normally
distributed data set you are analyzing, your...
asked 1 hour ago -
During the month of August, the average temperature of a lake
next to a local college...
asked 58 minutes ago