If the average level of outstanding receivables is 700000

Assignment Help Accounting Basics

Reference no: EM13396866

Assume that Sunshine Products Inc has an agreement with Shady Finance Company to factor its receivables. Shady charges a flat commission of 2 percent of the receivables factored, plus 6 percent a year interest on the outstanding balance. It also deducts a reserve of 10 percent for returned and damaged materials. Interest and commission are paid in advance. No interest is charged on the reserve or the commission. If the average level of outstanding receivables is $700,000 and if they are turned over 4 a year, then what is the effective quarterly interest rate charged by Shady for this arrangement?

Reference no: EM13396866

Questions Cloud

Some hints to support your solution with financial formulas : create a proposal project which is addressing a problem in your organization or community.you will need to do an

Star corporation issued both common and preferred stock : star corporation issued both common and preferred stock during 20x6. the stockholders equity sections of the companys

What are the premises in the articlewhat evidence is : choose an editorial article from the new york times or the wall street journal. browse the library and choose an

Payroll accounting suppose that the following tax rates as : payroll accounting. assume that the following tax rates and payroll information pertain to brookhaven publishingbull

If the average level of outstanding receivables is 700000 : assume that sunshine products inc has an agreement with shady finance company to factor its receivables. shady charges

On january 1 2014 harter company had accounts receivable : on january 1 2014 harter company had accounts receivable 127600 notes receivable 25200 and allowance for doubtful

In general terms compare and contrast how expenditures are : your city has decided to build a new library. the projected cost is 2 million. a bond issue for 1.2 million has been

The mkworld airline system is composed of the european and : the mkworld airline system is composed of the european and african routes each of which requires 10 aircrafts. these

Write a brief essay describing the benefits of maintenance : 1.write a brief essay describing the benefits of maintenance planning in detail.two pages minimum.of the six planning

User Account

All Pages