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d. Payables turnover goes from 6 times to 11 times.
e. Receivables turnover goes from 7 times to 9 times.
f. Payments to suppliers are accelerated.
11. Calculating the Cash Budget [LO3] Here are some important
figures from the budget of Nashville Nougats, Inc., for the second
quarter of 2015:
The company predicts that 5 percent of its credit sales will never be
collected, 35 percent of its sales will be collected in the month of the
sale, and the remaining 60 percent will be collected in the following
month. Credit purchases will be paid in the month following the
purchase.
In March 2015, credit sales were $235,000 and credit purchases were
$161,300. Using this information, complete the following cash budget:
Ch. 20: Questions 8 & 14 (Questions and Problems section)
8. Size of Accounts Receivable [LO1] The Arizona Bay Corporation
sells on credit terms of net 30. Its accounts are, on average, four days
past due. If annual credit sales are $9.75 million, what is the company’s
balance sheet amount in accounts receivable?
14. Credit Policy Evaluation [LO2] The Snedecker Corporation is
considering a change in its cash-only policy. The new terms would be
net one period. Based on the following information, determine if the
company should proceed or not. Therequired return is 2.5 percent per
period.