Charming Paper Company sells to the 12 accounts listed
here.
Account |
Receivable Balance Outstanding |
Average Age of the Account Over the Last Year |
||||
A | $ | 64,300 | 27 | |||
B | 212,000 | 43 | ||||
C | 74,900 | 13 | ||||
D | 20,300 | 61 | ||||
E | 56,600 | 42 | ||||
F | 260,000 | 32 | ||||
G | 35,200 | 25 | ||||
H | 321,000 | 68 | ||||
I | 49,900 | 31 | ||||
J | 92,000 | 51 | ||||
K | 284,000 | 18 | ||||
L | 66,000 | 33 | ||||
Capital Financial Corporation will lend 90 percent against account
balances that have averaged 30 days or less; 80 percent for account
balances between 31 and 40 days; and 70 percent for account
balances between 41 and 45 days. Customers that take over 45 days
to pay their bills are not considered acceptable accounts for a
loan.
The current prime rate is 18.50 percent, and Capital charges 4.50
percent over prime to Charming as its annual loan rate.
a. Determine the maximum loan for which Charming
Paper Company could qualify.
b. Determine how much one month’s interest expense
would be on the loan balance determined in part a.
(Do not round intermediate calculations. Round your final
answer to 2 decimal places.)
SOLUTION
A.
0-30 days | Amount ($) |
A | 64,300 |
C | 74,900 |
G | 35,200 |
K | 284,000 |
Total | 458,400 |
Loan % | 90% |
Loan | 412,560 |
31-40 days | Amount ($) |
F | 260,000 |
I | 49,900 |
L | 66,000 |
Total | 375,900 |
Loan % | 80% |
Loan | 300,720 |
41-45 days | Amount ($) |
B | 212,000 |
E | 56,600 |
Total | 268,600 |
Loan % | 70% |
Loan | 188,020 |
Maximum Loan = $412,560 + $300,720 + $188,020 = $901,300
B. One month’s interest = Monthly interest rate * Principal
= (23% / 12) * $901,300
= $17,274.86
Charming Paper Company sells to the 12 accounts listed here. Account Receivable Balance Outstanding Average...
Charming Paper Company sells to the 12 accounts listed here. Average Age of the Account Over the Last Year Account 29 43 Receivable Balance Outstanding $ 63,400 165,000 77,300 21,600 50,000 297,000 32,200 349,000 40,100 98,500 229,000 63,000 Capital Financial Corporation will lend 90 percent against account balances that have averaged 30 days or less, 80 percent for account balances between 31 and 40 days, and 70 percent for account balances between 41 and 45 days. Customers that take over...
Charming Paper Company sells to the 12 accounts listed here. Average Age of the Account Over the Last Year 25 43 19 57 42 39 24 67 32 59 Receivable Balance Outstanding $ 63,600 133,000 73,300 29,100 56,100 253,000 33,400 349,000 45,300 90,600 237,000 61,000 Account A B K 15 37 Capital Financial Corporation will lend 90 percent against account balances that have averaged 30 days or less; 80 percent for account balances between 31 and 40 days; and 70...
Charming Paper Company sells to the 12 accounts listed here. Account A B C 0 E F G H I Receivable Balance Outstanding $ 62,300 174,000 77,000 27,100 59,300 257,000 34,600 340,000 42,900 96,900 305,000 66,400 Average Age of the Account Over the Last Year 29 44 12 61 43 35 20 67 35 53 23 38 K Capital Financial Corporation will lend 90 percent against account balances that have averaged 30 days or less. 80 percent for account balances...
$1,000,000 3 Requested loan amount HEDRICK COMPANY Comparative Balance Sheet This Year Last Year 9 Assets 10 Current assets: 11 Cash 12 Marketable securities 13 Accounts receivable, net 14 Inventory 15 Prepaid expenses $320,000 $420,000 100,000 600,000 1,300,000 800,000 60,000 2,600,0001,980,000 3,100,000 2,980,000 5700,000 4960,000 80,000 16 Total current assets 17 Plant and equipment, net 18 Total assets 19 20 Liabilities and Stockholders' Equity 21 Liabilities: 22 Current liabilities 23į Bonds payable, 10% 24 Total liabilities 25 Stockholders' equity 26...