Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Excel Online Structured Activity: Receivables investment McEwan Industries sells on terms of 3/10, net 25 . Total sales for the year are $721,500;40% of the

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Excel Online Structured Activity: Receivables investment McEwan Industries sells on terms of 3/10, net 25 . Total sales for the year are $721,500;40% of the customers pay on the 10 th day and take discounts, while the other 60% pay, on average, 82 days after their purchases. Assume 365 days in year for your calculations. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. What is the days sales outstanding? Round your answer to two decimal places. days b. What is the average amount of recelvables? Round your answer to the nearest cent. Do not round intermediate calculations. $ c. What is the percentage cost of trade credit to customers who take the discount? Round your answers to two decimal places. % d. What is the percentage cost of trade credit to customers who do not take the discount and pay in 82 days? Round your answers to two decimal places. Do not round intermediate calculations. Nominal cost: % Effective cost: % e. What would happen to McEwan's accounts receivable if it toughened up on its collection policy with the result that all nondiscount customers paid on the 25 th day? Round your answers to two decimal places. Do not round intermediate calculations. DSO = days Average receivables =$ Receivables investment Credit Terms: Discount \% Discount period (in days) Amount due (in days) Total sales Number of days in year % of customers that take discount and pay on discount day % of customers that pay after discount period Average days after purchase by nondiscount customers Calculation of Days Sales Outstanding (DSO): |Days sales outstanding (DSO) B c D E F 3.00% 10 25 $721.500.00 365 40.00% 60.00% 82 Calculation of Average Amount of Receivables

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management Principles And Applications

Authors: J William Petty, Sheridan Titman, Arthur J Keown, John D Martin, Peter Martin, Michael Burrow, Hoa Nguyen

6th Edition

1442539178, 9781442539174

More Books

Students also viewed these Finance questions