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Question - Suppose a firm that currently does not grant credit is considering to adopt a credit policy that will permit its customers to pay the full price for purchases within 30 days of the purchase. The firm estimates that it can increase the price of the product by $2 per unit to $112, with annual sales increasing from 10,000 to 11,000 units, and per unit variable costs not changing from $99. It also estimates that annual bad debt losses will amount to $5,000 and an A/R clerk will have to be hired part-time to track receivables and make collection calls, at an annual cost of $20,000. The firm plans to finance the working capital investment by using its line of credit charging 6% EAR interest. If the firm's tax-rate is 40%, then should the firm adopt the policy?
A company which makes up its financial statements annually to 31 December, provides for depreciation of its machinery at the rate of 12 per cent per annum using the reducing balance method.
Peggy Fleming, Inc. has a fiscal year ending April 30. On May 1, 2014, Peggy Fleming borrowed $10,363,000 at 11% to finance construction of its own building. Repayments of the loan are to commence the month following completion of the building. Durin..
What is the balance in cash after transactions? Purchased office supplies on account 800 Paid salaries in cash 900. Performed services on credit 2,100.
The dividend decision relates to the amount and timing of any cash payments made to the company's stakeholders, Comment on the nature of dividend policies
Explain the significance of financing with accounts payable. Also, explain the rationale of taking a cash discount, such as 2/10, net/30.
Discuss the impact on the financial statements and of the audit of each issue, including an assessment of whether it is material
Gillett Company, What is the effect on the 2019 ?nancial statements as a result of incorrectly expensing instead of capitalizing the $5000 cost?
Prepare general journal entries to record the transactions. Issued a credit memorandum for $300 to a customer who returned merchandise purchased on November 29.
Wake Products, Inc. has current earnings per share of $5 based on 2 million shares of common outstanding. Calculate the earnings per share after the conversion
Give the journal entry for issuing 8% $100,000 10 year bond issued at 110. Debits and Credits and the amount to record the issue.
Assume same facts as those for Part (a), except the 60 bonds were issued on September 1, 2017 (rather than in 2016), and none have been converted
question kee huat steel constructor managed to safe a fixed price contract from resort sentosa to build a
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