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Determine the consequences of the transaction

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Question 1: Your company received a $7 million order on the last day of the year. You filled the order with $3 million worth of inventory. The customer picks up the order the same day and pays $2 million up front in cash; you also issue a bill for the customer to pay the remaining balance of $5 million within 40 days. Suppose your firm's tax rate is 0% (ignore taxes). Determine the consequences of this transaction for each of the following:

Account                              Increase/Decrease                 Value of Effect

Revenues

Earnings

Receivables

Inventory

Cash

Reference no: EM132483804

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