Purchase Solution

Trade credit and receivables

Not what you're looking for?

Ask Custom Question

Please help with the following problems. Please provide step by step calculations with explanations.

A firm offers terms of 2/15,net 30. Currently, two-thirds of all customers take advantage of the trade discount; the remainder pay bills at the due date.

A. What will be the firm's typical calue for its accounts recievable?

B. What is the average investment in accounts receivable if annual sales are $20 million?

C. What would likely happen to the firm's accounts receivable period if it changed its terms to 3/15, net 30?

See attached 21-7 for further information

Attachments
Purchase this Solution
Solution Summary

This solution helps with a problem involving trade credit and receivables. Step by step calculations are given for each, along with explanations.

Solution Preview

A firm offers terms of 2/15,net 30. Currently, two thirds of all customers take advantage of the trade discount; the raminder pay bills at the due date.

A. What will be the firm's typical calue for its accounts recievable?

2/3 of the receivable account is collected within 15 days, ...

Purchase this Solution
Free BrainMass Quizzes
Motivation

This tests some key elements of major motivation theories.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

View More Free Quizzes
Related BrainMass Solutions

  • Receivables Investment & Cost of Trade Credit

    DSO = Receivables Average sales per day 17 = Receivables $3,500 Receivables = $59,500 Cost of Trade Credit What is the nominal and effective cost of trade credit under the credit terms of 3/15, net 30?

  • Cost of trade credit: Grunewalds's non discount customers

    What are the nominal and effective costs of trade credit to Grunewalds's non discount customers? (Hint: Calculate sales/day based on a 365-day year;then get average receivables of discount customers;then find the DSO for the non discount customers.)

  • Accounts Receivable Average & Cost of Trade Credit

    This solution assists with determining Medwig's average accounts receivables and determines the nominal and effective cost of trade credit.

  • Cost of Trade Credit, Cash Conversion Cycle

    108516 Cost of Trade Credit, Cash Conversion Cycle Cost of Trade Credit Calculate the nominal annual cost of nonfree trade credit under each of the following terms. Assume payment is made either on the due date or on the discount date.

  • Financial Sheet Analysis of Trade and Other Receivables

    604814 Financial Sheet Analysis of Trade and Other Receivables Attached are two companies' annual reports. Please look through these two annual reports and discuss the key components and features of trade and other receivables.

  • Trade Credit: NPV, Factors Affecting Collection Period

    The solution discusses the trade credit, in particular the net present value, and factors affecting the collection period.

  • Amount of trade receivables; total cost per unit

    395876 Amount of trade receivables and total cost per unit Please answer the following problems (see attached file for data) During July, sales of $350,000 were made of which 20% were in cash.

  • Notes receivable

    254389 Notes Receivables, interest revenue and more (Gale Sondergaard Company) (Reporting of Notes Receivable, Interest, and Sale of Receivables) On July 1, 2007, Gale Sondergaard Company sold special-order merchandise on credit and received in return

  • Receivables Calculations

    2) What is the average amount of receivables? 3) What is the percentage cost of trade credit to customers who take the discount and to those who do not take it?

  • Question about Trade Credit and Receivables

    22168 Question about Trade Credit and Receivables Trade Credit and Receivables. A firm offers terms of 2/15, net 30. Currently, two-thirds of all customers take advantage of the trade discount; the remainder pay bills at the due date. a.

View More Related Solutions