Effect of Projected Income Statement Under Current Credit Policy Statement Under New Credit Policy Credit Policy 20 Changing Credit Policy Analysis Change $125,000 $2,840,000 0 $2,715,000 21 Gross sales 22 Discounts 23 Net sales 0 25 Profit before credit costs and taxes 26 Credit-related costs: 28 Bad debt losses 0 0 30 Taxes 31 Net income 33 Should the change in credit terms be made?
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Tightening Credit Terms Firm's current credit terms, net Industry-wide credit terms, net Discount...
Firm A expects to have sales of $15 million under its current credit policy. The...
Firm A expects to have sales of $15 million under its current credit policy. The present terms are net 30; the days sales outstanding (DSO) is 60 days; and the bad debt loss percentage is 5 percent. The treasurer has proposed that the credit period be shortened to 15 days. This change would reduce expected sales by $500,000 but it would shorten the DSO on the remaining sales to 30 days. Expected bad debt losses on the remaining sales...
Van Doren Housing expects to have sales this year of $15 million under its current credit...
Van Doren Housing expects to have sales this year of $15 million under its current credit policy. The present terms are net 30; the days sales outstanding (DSO) is 60 days; and the bad debt loss percentage is 5 percent. Also, Van Doren’s cost of capital is 15 percent, and its variable costs total 60 percent of sales. Since Van Doren wants to improve its profitability, a proposal has been made to offer a 2 percent discount for payment within...
please help me to solve for this question Excel Online Structured Activity: Tightening Credit Terms omit...
please help me to solve for this question
Excel Online Structured Activity: Tightening Credit Terms omit Kim Mitchell, the new credit manager of the Vinson Corporation, was alarmed to find that Vinson sells on credit terms of net 90 days while industry-wide credit terms have recently been lowered to net 30 days. On annual credit sales of $1.86 million, Vinson currently averages 95 days of sales in accounts receivable. Mitchell estimates that tightening the credit terms to 30 days would...
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....
Wellington Imports, an importer and exporter of precious metals and jewelry from around the world, sells...
Wellington Imports, an importer and exporter of precious metals and jewelry from around the world, sells its objets d'art to stores in six southwestern states and generates annual sales of $6,000,000. In response to increasing concerns regarding the firm's slow collections and elevated bad-debt ratios, Wellington's treasurer has suggested that the firm change its current collection policy. Specifically, he proposes that the firm progress beyond its current collection efforts (sending late-payment notices and making follow-up telephone calls) and hire an...
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....
Morgan Valley Inc. has current sales of $540,000. All of its sales are on credit and...
Morgan Valley Inc. has current sales of $540,000. All of its sales are on credit and there is no default. It currently sells on terms of net 30 and has an accounts receivable balance of $50,000. The company is considering a new credit policy with terms of net 60. Under the new policy, sales are expected to increase to $600,000, and accounts receivable are expected to increase to $100,000. Part 1 What is the firm's days sales outstanding under the...
Morgan Valley Inc. has current sales of $540,000. All of its sales are on credit and...
Morgan Valley Inc. has current sales of $540,000. All of its sales are on credit and there is no default. It currently sells on terms of net 30 and has an accounts receivable balance of $50,000. The company is considering a new credit policy with terms of net 60. Under the new policy, sales are expected to increase to $600,000, and accounts receivable are expected to increase to $100,000. Part 1 What is the firm's days sales outstanding under the...
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...
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...
please help me to solve for this question
Excel Online Structured Activity: Tightening Credit Terms omit Kim Mitchell, the new credit manager of the Vinson Corporation, was alarmed to find that Vinson sells on credit terms of net 90 days while industry-wide credit terms have recently been lowered to net 30 days. On annual credit sales of $1.86 million, Vinson currently averages 95 days of sales in accounts receivable. Mitchell estimates that tightening the credit terms to 30 days would...
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....
Wellington Imports, an importer and exporter of precious metals and jewelry from around the world, sells its objets d'art to stores in six southwestern states and generates annual sales of $6,000,000. In response to increasing concerns regarding the firm's slow collections and elevated bad-debt ratios, Wellington's treasurer has suggested that the firm change its current collection policy. Specifically, he proposes that the firm progress beyond its current collection efforts (sending late-payment notices and making follow-up telephone calls) and hire an...
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...
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...
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