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Accounts Receivable (Credit) Management

Effective annual cost of the trade credit

The Thompson Corporation projects an increase in sales from $1.5 million to $2 million, but it needs and additional $300,00 of current assets to support this expansion. Thompson can finance the expansion by no longer taking discounts, thus increasing accounts payable. Thompson purchases under terms of 2/10, net 30, but can de

Journalizing various receivable transactions.

The trial balance before adjustment for sinatra company shows the following balances DR - Accounts Rec. 82,000 DR - Allowance for doubtful accounts 1,750 CR - Sales 430,000 1. To obtain additional cash, Sinatra factors without recourse 20,000 of accounts receivable with Stills Finance. The finance charge is 10% of the a

Jimmy Jack, Inc: Evaluate the proposed change in relaxing Credit Standards

Jimmy Jack, Inc. is considering relaxing its credit standards in order to meet a competitor's change in credit policy. As a result of the proposed change, sales during the coming year are expected to increase 15%, from 5,000 cars to 5,750 cars, the average collection period is expected to increase from 35 days to 45 days, and ba

Cleaning Maids Inc: Effects of a relaxation of credit standards

Cleaning Maids Inc. is considering shortening its credit period from 30 days to 20 days and believes, as a result of this change, its average collection period will decrease from 36 days to 30 days. Bad debt expenses are also expected to decrease from 1.2% to 0.8% of sales. The firm is currently selling 300,000 units but believe

Identifying normal debit and credit balances as applied to a list of accounts

Indicate whether each of the following accounts normally has a debit or cresit balance. a. common stock b. retained earnings c. certificate of deposit d. interest expense e. accounts receivable f. interest revenue g. insurance expense h. interest payable i. cash j. dividends k. unearned revenue l. operating expense

Comparing costs of credit using calculation methods

You have been pricing a compact disk player in several stores. 3 stores have the identical price of $300. Each storecharges 18% APR, has a 30 day grace period, and sends out bills on the 1st of the month. On further investigation, you find that store A calculates the finance charge by using the average daily balance method, stor

Accounts Payable and Accounts Receivable Questions

2. Please explain how would you record the following Invoices and payment in T accounts: - Invoice #1: Office supplies from Office Depot $150 - Invoice #2: Interest accrual from loan acquired with Bank of America of $40,000 - Invoice #3: Electricity bill from Reliant Energy $700 - Payment of invoice #1 with a wire transfe

Calculating PV, future spending plans and analyzing credit deals

Can you help me get started with this assignment? 1. Mike Polanski is 30 years of age and his salary next year will be $40,000. Mike forecasts that his salary will increase at a steady rate of 5 percent per annum until his retirement at age 60. a. if the discount rate is 8 percent, what is the PV of these future salary paym

Corporate finance

Need help on the problems in the attached document. Label each answer... be specific as possible.....if you'd like you may use bullet items to respond to the questions... 1. Corporate Finance Organization: In a large corporation, what are the two distinct groups that report to the chief financial officer? Which group

Write-off of accounts receivable

BE9-4 At the end of 2006, Endrun Co. has accounts receivable of $700,000 and an allowance for doubtful accounts of $54,000. On January 24, 2007, the company learns that its receivable from Oswego Inc. is not collectible, and management authorizes a write-off of $6,400. (a) Prepare the journal entry to record the write-off. (

Credit Protection

Maria receives two new credit cards on May 1. She had solicited one of them from Midtown Department Store, and the other had arrived unsolicited from the High Flying Airlines. During the month of May, Maria makes numerous a credit card purchases from Midtown Store, but she does not use the High Flying Airlines card. On May 31

Reed's Clothier: Ratio Analysis and Working Capital Management

See the attached document and answer the eight questions found on the bottom. For question 1, calculate all of the ratios listed in Exhibit 4 of the case. Jim Reed, II had just left a rather unpleasant meeting with his banker, Harold Holmes of First Virginia National Bank. Jim had banked with First Virginia for almost 30 year

Curent Asset Management

Company X has credit sales of $144,000 yearly with credit terms of net 30 days, which is also the average collection period. Company X does not offer a discount for early payment, so it's customers take 30 days to pay. If Company X offered a 2% discount for payment in 10 days and every customer took advantage, (using full sal

Credit Management: usefulness of criteria

Discuss the usefulness of following criteria for credit management 1) Terms of sale 2) The promise to pay 3) Credit analysis 4) The credit decision 5) Collection policy

Available Credit

What is the difference between having available credit, some debt, and some cash vs. no debt, no available credit, and very little cash, because you have always paid all debts with cash?

What should the nominal cost of trade credit be to those customers who do not take discounts, based on a 365 day year, assuming that they pay on time, even though they do not?

I have been given a sample of study questions for my upcoming financial management test. Most of it I have been able to do fairly easily, but there are 5 questions I am having a difficult time with. Specifically, I am looking for not only the answer to these following questions, but how you came to get them as this is what I rea

Description of Accounts Receivable

8-2A At December 31, 2007, Curtis Imports reported this information on its balance sheet Accounts receivable $600,000 Less: Allowance for doubtful accounts $40,000 During 2008, the company had the following transactions related to receivables. 1) Sales on the account

Filing Status, Dependency Exemptions, and Child Credit

Filing Status, Dependency Exemptions, and Child Credit. For the following taxpayers, indicate which tax form should be used, the applicable filing status, and the number of personal and dependency exemptions available, and the number of children who qualify for the child credit. a. Arnie is a single college student who earned

Finance Questions

1. In the management of cash and marketable securities, why should the primary concern be for safety and liquidity rather than maximization of profit? 2. Explain the similarities and differences of lockbox systems and regional collection offices. 3. Why would a financial manager want to slow disbursement? 4. Why are Treasury

Cash Management Paper

A. Compare and contrast various cash management techniques. b. Compare and contrast the various methods of short-term financing.

Credit to Corporate Customers

When we all talk about the risk of extending credit to corporate customers, what is a quick and easy method of measuring the credit risk of a publicly traded firm?

Accounts payable and credit terms for customers

A company has been selling on a 3/10, net 30 basis. The company changes its credit terms to 2/20, net 90. The change will affect the customer's accounts payable and bank loan by: increasing payables and decreasing bank loans or increasing payables and increasing bank loans