Charmin Paper Company sells to the 12 accounts listed below.
		Average Age
	Receivable	of the
	Balance	Account over
Account	Outstanding	the Last Year
A	$60,800	22
B	168,000	43
C	78,300	19
D	24,300	55
E	58,900	42
F	238,000	39
G	30,400	16
H	374,000	72
I	41,400	32
J	96,500	58
K	292,000	17
L	67,700	37
Capital Financial Corporation will lend 90 percent against account balances that have averaged 30 days
or less; 80 percent for account balances between 31 and 40 days; and 70 percent for account balances
between 41 and 45 days. Customers that take over 45 days to pay their bills are not considered
acceptable accounts for a loan.
The current prime rate is 15.5 percent, and Capital charges 4.5 percent over prime to Charmin as its annual
loan rate.
a. Determine the maximum loan for which Charmin Paper Company could qualify.
b. Determine how much one months interest expense would be on the loan balance determined in part a.
Solution
Problem 8-27
Instructions
Enter data and formulas to complete the requirements of this problem.
a. Determine the maximum loan for which Charmin Paper Company could qualify.
	Charmin Paper Company
0-30 days		Amount
A
C
G
K
	Total	FORMULA
	Loan %
	Loan	FORMULA
31-40 days		Amount
F
I
L
	Total	FORMULA
	Loan %
	Loan	FORMULA
41-45 days		Amount
B
E
	Total	FORMULA
	Loan %
	Loan	FORMULA
Maximum loan		FORMULA
b. Determine how much one months interest expense would be on the loan balance determined in part a.
Loan balances		FORMULA
Interest, 20% Annual
(15.5% prime+4.5%)			(1.00% per month)
One month's interest	FORMULA

Please include the Excel formulas where indicated in the question.