Finance/Accounting

posted by .

Milwaukee Surgical Supplies, Inc, sells on terms of 3/10, net 30. Gross sales for the year are $1,200,000 and the collections department estimates that 30 percent of the customers pay on the tenth day and take discounts, 40 percent pay on the thirtieth day, and the remaining 30 percent pay, on average, 40 days after the purchase (Assume 360 days per year)

a. What is the firm's average collection period?
b. What is the firm's current receivables balance?
c. What would be the firm's new receivables balance if Milwaukee Surgical toughened up on its collection policy, with the result that all nondiscount customers paid on the 3oth day?
d. Suppose that the firm's cost of carrying receivables was 8 percent annually. How much would the toughened credit policy save the firm in annual receivables carrying expense? (Assume that the entire receivables had to be financed).

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. accounting

    ER Medical Supplies had sales of 2,000 units at $160 per unit last year. The marketing manager projects a 25 percent increase in univolume this year with a 10 percent price increase. Returned merchandise will represent 5 percent of …
  2. Finance

    Until recently, Augean Cleaning Products sold its products on terms of net 60, with an average collection period of 75 days. In an attempt to induce customers to pay more promptly, it has changed its terms to 2/10, EOM, net 60. The …
  3. accounting

    On October 31, a flood at Payne Company’s only warehouse caused severe damage to its entire inventory. Based on recent history, Payne has a gross profit of 25 percent of net sales. The following information is available from Payne’s …
  4. accounting

    Les Fleurs, a boutique in Paris, France, had the following accounts in its accounting records at December 31, 20X2 (amounts in Euros, denoted as "E") Purchases………………... E250,000 Freight In……………… E8,000 Sales …
  5. Finance

    Milwaukee Surgical Supplies, Inc., sells on terms of 3/10, net 30. Gross sales for the year are $1,200,000 and the collections department estimates that 30% of the customers pay on the tenth day and take discounts, 40% pay on the thirtieth …
  6. Finance

    ER Medical Supplies had sales of 2,000 units at $160 per unit last year. The marketing manager projects a 25 percent increase in unit volume this year with a 10 percent price increase. Returned merchandise will represent 5 percent …
  7. adult education

    Given Data: Total Sales: $912,500 % of customers that take discounts: 40% % of customers that do not take discounts: 60% # of days that cusomers who take discounts pay by: 10 Days # of days that customers who do not take discounts …
  8. Healthcare finance

    Milwaukee Surgical Supplies, Inc., sells on terms of 3/10, net 30. Grosee sales for the year are $1,2000,000 and the collections department estimates that 30% of the customers pay on the tenth day and take discounts, 40% pay on the …
  9. finance

    Fashion Distributors Incorporated currently sells on terms of 2/10, net 30, with bad debt losses at 1% of gross sales. Of the 99% of the customers that pay, 50% take the discount and pay on Day l0; the remaining 50% pay on Day 30 (average …
  10. Healthcare finance

    Lansing Surgical Supplies Inc, sells on terms of 2/10, net 30. Gross sales for the year are 1.3 million and the collections department estimates that 30 percent of the customers pay on the tenth day and take discounts, 40 percent pay …

More Similar Questions