Pls this is a new one Financial Accounting 49 01SupEx (Receivables doc Use yur o
ID: 2570544 • Letter: P
Question
Pls this is a new one
Financial Accounting 49 01SupEx (Receivables doc Use yur oun paper Inatructor-Turck Sta rt each probiem on a new sheet of paper 1. Compute the maturity date and the missing ansount for each of the following interesl (for easier caleulations, assume 360 days per year) bearing promissoey sotes Principal in Dollars x Annual Rate x Fraction of Year - Interest in Dollars Principal (a) $17,000 (b) ? 10% 950 Issue dae Maturity dats 8/21/2013 4/4/2014 180 days 120 days months months $450 $3,000 $1,375 (c) 560,000 8/17/2013 8/30/2013 (d) $50,000 2. Buck's Coffee Company(BCC), an importer of Columbian coffee, BCC maintains a tight credit policy. Howevet BCC an account to some regular customers; and occasionally accepts new customers for sales on account. BCC the resulting Accounts Receivable. Average experience for the past three years has been as follows: Sales Cost of Goods Sold Bad Debt Expense Additional Operating Expenses $350,000 $200,000 $150,000 210,000 4,000 61,000 Buck Anderson, the manager and sole shareholder, is considering loosening the credit policy by accepting customers' credit cards (eg, VISA & Mastercard). He expects to sell 10% more coffee from easing credit restrictions. And he assumes that ALL sales will be via credit card. Also Buck believes that switching to credit cards will save the business $2,000 on accounting and additional operating expenses. However VISA and Mastercard will charge BCC a 2% transaction fee on credit-card sales Instructions (assume no income taxes): Should BCC contract with Visa and Mastercard and start accepting credit cards? (to answer the question, prepare income statements under the present scenario and then under the credit card plan, then compare Net Income projections) l. 2 Buck has learned that credit card companies are planning to triple their fees, does your answer change?Explanation / Answer
Answer 1. Principal Annual Interest Rate Term Total Interest Issue Date Maturity Date a. 17,000 10% 180 days 850 8/21/2013 2/17/2013 $17,000 X 10% X 180/360 b. 15,000 9% 120 days 450 4/4/2014 8/2/2014 ($450 X 360/120 X 1/9%) c. 60,000 12% 5 month 3,000 8/17/2013 1/16/2014 ($3,000 X 12/5X 1/60000) d. 50,000 11% 3 month 1,375 8/30/2013 11/29/2013 1,375/(50,000 X 11%) X 12