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July 23, 2014

Homework Help: Accounting: Lock Box System

Posted by Lola on Tuesday, October 10, 2006 at 9:13am.

What minimum reduction in the time to collect and process each check is needed to justify use of the lock box system? If 400 payments per day, 2,000 average payment size, Bank charge $.40 per check and interest rate is .015 per day.




The answer depends on the value of time. For example, the answer differs if you process the checks yourself versus if an employee processed the checks for minimum wage.

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