Reference no: EM132579224

Oslo Corporation is engaged in a multi-level marketing business that presently requires all sales agents to mail checks to its Manila office. An average of three days is required for mailed checks to be received, one day for Oslo Corporation to process them and three days to clear through its banks.

The company's treasurer proposed a change in the system, where the checks will no longer be mailed to Manila office. Instead, checks collected will be deposited on-line in any branch of the company's depository bank, and the deposit slips, as well as the other

pertinent documents will be sent by fax or e-mail to the Manila office on the same day. The original deposit slips and other documents will be submitted by the sales agents to Manila when they attend the Sales Agents' Monthly Meeting. The new system will eliminate the mailing float and the processing time. Oslo Corporation has an average daily collection of P50,000.

Question 1: If the new system is implemented, Oslo Corporation's average cash balance will increase by