Clayton Systems is a company that provides business-to-business products and services, generating over $3 billion in annual revenues. The following question pertains to Clayton Systems Financial Statements from fiscal years 2012 and 2013. In fiscal year 2013, Clayton had over $213 million of accounts receivable and $244 million in accounts payable on its balance sheet. In fiscal year 2014, if Clayton were to change its customers' terms of payments from Net 90 to Net 30, which of the following would be the most likely outcome on the balance sheet? OA) Accounts receivable would decrease OB) Accounts receivable would increase OC) Accounts payable would decrease OD) Accounts payable would increase

Clayton Systems is a company that provides business-to-business products and services, generating over $3 billion in annual revenues. The following question pertains to Clayton Systems Financial Statements from fiscal years 2012 and 2013. In fiscal year 2013, Clayton had over $213 million of accounts receivable and $244 million in accounts payable on its balance sheet. In fiscal year 2014, if Clayton were to change its customers' terms of payments from Net 90 to Net 30, which of the following would be the most likely outcome on the balance sheet? OA) Accounts receivable would decrease OB) Accounts receivable would increase OC) Accounts payable would decrease OD) Accounts payable would increase

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 3P

See similar textbooks

Similar questions

CornProducts Corporation ended the year 2018 with an average collection period of 40 days. The firm's credit sales for 2018 were $9 million. What is the approximate year-end 2018 balance in accounts receivable for Corn Products?
Green Technologies is a leading global end-to-end technology provider, with a portfolio of hardware, software and service solutions. In a recent annual report, the balance sheet included the following information ($ in millions): Current assets: Receivables, less allowance of $289 in 2020 and $280 in 2019 Req 1 In addition, the income statement reported sales revenue of $105,232 million for the current year. All sales are made on a credit basis. The statement of cash flows indicates that cash collected from customers during the current year was $104,868 million. There could have been significant recoveries of accounts receivable previously written off. Required: 1. Compute the following ($ in millions): Req 2A 2020 a. The amount of bad debts written off by Green during 2020 (Hint. Treat it as a plug in the gross accounts receivable account). b. The amount of bad debt expense that Green included in its income statement for 2020 (Hint. Treat it as a plug in the allowance for…
MC Corporation manufactures large-scale, high-performance computer systems. In a recent annual report, the balance sheet included the following information ($ in millions): 2015 2014 Current assets: Receivables, less allowances of $90 in 2015 and $72 in 2014 $ 3,977 $ 4,413 In addition, the income statement reported sales revenue of $24,704 ($ in millions) for the current year. All sales are made on a credit basis. The statement of cash flows indicates that cash collected from customers during the current year was $25,737 ($ in millions). Note that there could have been significant recoveries of accounts receivable previously written off. Required:1. Compute the following ($ in millions): The net amount of bad debts written off or reinstated by EMC during 2015. The amount of bad debt expense or reduction of bad debt expense that EMC included in its income statement for 2015. 2. Suppose that EMC had used the direct write-off method to account for bad…
Bold Company’s 2016 income statement reported total credit revenue of $250,000. Bold’s accounts receivable balance on January 1, 2016 was $30,000, and its December 31, 2016 accounts receivable balance was $10,000. Bold’s accounts payable balance on January 1, 2016 was $25,000, and its December 31, 2016 accounts payable balance was $35,000. How much did Bold collect from customers during 2016?
Maggie's Muffins, Inc., generated $2,000,000 in sales during 2016, and its year-end total assets were $1,600,000. Also, at year-end 2016, current liabilities were $1,000,000, consisting of $300,000 of notes payable, $500,000 of accounts payable, and $200,000 of accruals. Looking ahead to 2017, the company estimates that its assets must increase at the same rate as sales, its spontaneous liabilities will increase at the same rate as sales, its profit margin will be 3%, and its payout ratio will be 60%. How large a sales increase can the company achieve without having to raise funds externally; that is, what is its self-supporting growth rate? Do not round intermediate steps. Round your answers to the nearest whole. Give typing answer with explanation and conclusion
EMC Corporation manufactures large-scale, high-performance computer systems. In a recent annual report, the balance sheet included the following information ($ in millions): 2015 2014 Current assets: Receivables, less allowances of $90 in 2015 and $72 in 2014 $ 3,977 $ 4,413 In addition, the income statement reported sales revenue of $24,704 ($ in millions) for the current year. All sales are made on a credit basis. The statement of cash flows indicates that cash collected from customers during the current year was $25,737 ($ in millions). Note that there could have been significant recoveries of accounts receivable previously written off. Required:1. Compute the following ($ in millions): The net amount of bad debts written off or reinstated by EMC during 2015. The amount of bad debt expense or reduction of bad debt expense that EMC included in its income statement for 2015. 2. Suppose that EMC had used the direct write-off method to account for bad…
At the beginning of the year, ABC's Accounts Receivable balance was $82,300. During the year ABC sold $5,963,000 to its customers on credit. At the end of the year the firm's Accounts Receivable balance was $179,300. How much did ABC receive in payments from its customers over the course of the year?
Mr. Husker’s Tuxedos Corp. ended the year 2015 with an average collection period of 32 days. The firm’s total sales for 2015 were $56.1 million. What is the year-end 2015 balance in accounts receivable for Mr. Husker’s Tuxedos?
During 2020, Best Corporation had cash and credit sales of $36,420 and $18,560, respectively. The company also collected accounts receivable of $10,350 and incurred operating expenses of $39,600, 80% of which were paid during the year. In addition, Best prepaid $4,500 for an 18 month advertising campaign that began September 30. Best Company's accrual basis net income (loss) for the year ending December 31, 2020 was: Group of answer choices A. $8,535 B. $240 C. $14,630 D. $18,800
At the beginning of 2017, EZ Tech Company's Accounts Receivable balance was $143,000, and the balance in Allowance for Doubtful Accounts was $2,450. EZ Tech's sales in 2017 were $1,070,000, 80% of which were on credit. Collections on account during the year were $690,000. The company wrote off $4,000 of uncollectible accounts during the year. Identify and analyze the transactions related to the collections of cash during 2017. Activity Operating Accounts Cash Increase, Accounts Receivable Decrease Statement(s) Balance Sheet only How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Balance Sheet Income Statement Stockholders' Net Assets = Liabilities + Equity Revenues – Expenses = Income…
Wilcox Mills is a manufacturer that makes all sales on 30-day credit terms. Annual sales are approximately $30 million. At the end of 2012, accounts receivable were presented in the company's statement of financial position as follows: Accounts receivable from clients $ 3,100,000 Less: Allowance for Impairment 80,000 During 2013, $190,000 of specific accounts receivable were written off as uncollectible. Of these accounts written off, receivables totaling $16,000 were subsequently collected. At the end of 2013, an aging of accounts receivable indicated a need for a $254,000 allowance to cover possible failure to collect the accounts currently outstanding. Wilcox Mills makes adjusting entries for uncollectible accounts only at year-end. 1. One entry to summarize all accounts written off against the Allowance for Impairment during 2013. 2. Entries to record the $16,000 in accounts receivable that were…
Paladin Furnishings generated $4 million in sales during 2016, and its year-end total assets were $3.2 million. Also, at year-end 2016, current liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and $100,000 of accrued liabilities. Looking ahead to 2017, the company estimates that its assets must increase by $0.80 for every $1.00 increase in sales. Paladin's profit margin is 5%, and its retention ratio is 40%. How large of a sales increase can the company achieve without having to raise funds externally? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Do not round intermediate calculations. Round your answer to the nearest cent. $