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Accounts Receivable (Credit) Management

Alternatives to a letter of credit

"I would not sell to these companies without a letter of credit. That would just be adding more risk on top of risk. It is risky enough conducting business outside of a person's country; not adding a letter of credit would not be a smart idea." What if you were a small company and obtaining a letter of credit for each cus

Process Improvement Plan - Accounts Receivable

It is the second Monday night in October and it is now 3AM. You cannot sleep. You are the CFO of Marysville General Hospital, a 300 bed community hospital in the Midwest. Your hospital Board meets at noon on the second Tuesday of each month. You have a truly awful report to give the Board and you are dreading it more than an

Asset Management for Hershey

Please attached Hershey Asset Management 2008 Tootsie Roll Asset Management 2008 Total Asset Turnover = Sales/Total Asset Total Asset Turnover = Sales/Total Asset 5,132,768 / 3,634,719 = 1.412 496,016 /812,092   = 0.611 Average Collection Period(ACP) Ave

Accounts Receivable, bad debt expense

See attached for better formatting.... BeleVu supplies showed the following selected adjusted balances at its December 31, 2010 year end: Accounts Receivable Dec.31/10 Balance 498,000 Allowance for Doubtful Accounts 16,680 Dec.31/10

Reporting issues for cash and cash equivalents

Accounting Cash Flows for Intermediate Accounting 11. MC053 Peterson Company has the following items at year-end: Cash in bank $30,000 Petty cash 500 Short-term paper with maturity of 2 months 8,200 Postdated checks 2,100 Peterson should report cash and cash equivalents of a. $30,000. b. $30,500. c. $38,70

Calculate the nominal cost of trade credit

A. If a firm buys under terms of 3/15, net 45, but actually pays on the 20th day and still takes the discount, what is the nominal cost of its nonfree trade credit? b. Does it receive more less credit than it would if it paid within 15 days?

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

Universal Credit: How Many Cardholders Should Be Sampled?

A partner company to American Intellectual Union (AIU), Universal Credit Inc., would like to examine the required sample size needed to be able to estimate the mean dollars that each card holder will spend each month. It would like to be within plus or minus $10 of the true mean with a 98% confidence level. The standard deviatio

Collection of receivables and ending balance

Can you help me get started on this assignment? For a company accounts receivables balances as a percentage of a March's sales are 95% of March's sales, 55% of February's sales, and 20% of January's. If this pattern continues, what is the estimated percentage of cash flows from April sales, March sales, February, and Janua

Net Accounts Receivable

Webster Lighting Ltd. began operations on December 1st of last year and is preparing their budgets for the upcoming quarter (January, February and March). After reviewing past receipt patterns you have found the following collection pattern: In the month of sale 40% In the first month after the sale 30% In the second month

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

Lock Box System - Colburn Inc

Colburn Inc. is considering a lock box system. The firm has analyzed its credit receipts and determined the following: Average time checks are in mail -3 days Average internal check processing time-3 days Average time to clear the banking system -2 days Total credit sales - 180 million Average check --$10,000 Colburn funds

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

Factoring of accounts receivable

Define the factoring of accounts receivables. How does factoring affect cash management? Explain the difference between factoring and accounts receivable financing.

Trade Credit Terms

What is the cost of not taking the suppliers' discounts? Reed's purchased about 80% of its purchases on terms of 3/10, net 60 and did not take cash discounts offered by the suppliers. Accounts are now 40 days past due. Cost of goods - 1,42870.2 67.0 (industry standard).

Clovis Company's Net Profit Margin

Industries has sales in 2006 of $40M 20 percent of which were cash. Clovis normally carries 45 days of credit sales in accounts receivable, what are its average accounts receivable balances? (assume a 365 day year) William Oil Company had a return on stockholders' equity of 18 percent during 2006. Its total asset turnover wa

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

Comparing Cost of Credit Cards

Bobby is trying to decide between 2 credit cards. One has no annual fee and an 18% interest rate,and the other has a $40 annual fee and and 8.9% interest rate. Should he take the card that's free or the one that costs $40?

Gorman Inc: The Cost of Revolving Credit

Gorman Inc. has arranged a $10,000,000 revolving credit agreement with a group of banks. The firm paid an annual commitment fee of 0.5% of the unused balance of the loan commitment. On the used portion of the revolver, it paid 1.5% above prime for the funds actually borrowed on a simple interest basis. The prime rate was 9% duri

Trade Credit

Optical Supply Company offers credit terms of 2/10, net 60. If Optical Supply is considering a change in its credit terms to one of those indicated below, explain whether the change should increase or decrease sales. (a) 2/10, net 30; (b) net 60; (c) 3/15, net 60; (d) 2/10, net 30,