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0 QUESTION 5 Accounts Receivable in the amount of $500,000 were assigned to Mariucci Finance Co. by Springfield as security for a loan. Mariucci withheld $75,000 of the A/R balance and loaned the rest of collectibles of $425,000 less a finance charge. Mariucci charged a 3% commission on a certain balance of A/R; the interest rate on the note is 12%. If the net proceeds of the loan were $410,000 then on what dollar amount of A/R was the commission charged? 500000 QUESTION 6 Assume the same information as in question no. 5. In the first month after the assignment, Springfield collected $200,000 on assigned accounts after deducting $450 of discounts. Springfield also wrote off a $530 assigned account. Assume Springfield's allowance for d/a had a DR balance of $500 before the write off. The incremental impact on gross profit from Springfield's collection above is: -450 QUESTION 7 Assume the same information as no. 5 The incremental impact on Springfield's working capital from the collection above is? -450 QUESTIONS Click Save and Submit to and submit. Click Save All Answer to save all ans. Save All Answers Close Wir Type here to search O

Answer 1

Answer to Question 5 Gross Proceeds of loan Less-Net Proceeds of loan Commission amount Commission rate A/R on which commission was charged $ $ $ 425,000 (410,000) 15,000 3% (15000/3%) $ 500,000 Answer to Question 6 The discount allowed on accounts recivable would directly impact the gross profit. However, the amount written off as bad debt would not impact gross profit. Hence, the impact on gross profit in the given case shall be ($450). Answer to Question 7 Working Capital before collection Cash Accounts Receivable Add- Allowance for doubtful debts (Dr bal.) Net Working Capital $ $ $ $ 200,530 500 201,030 199,550 Working Capital after collection Cash (200000-450) Accounts Receivable Add- Allowance for doubtful debts (Dr bal.) Net Working Capital $ $ $ $ 1,030 200,580 Difference (201030-200580) $ (450) The impact on working capital from above is ($450).