After noting that its receivables turnover ratio had declined, Imperative Company decided for the first time in the company’s history to sell $ 500,000 of receivables to a factoring company. The factor charges a factoring fee of 3 percent of the receivables sold. How much cash does Imperative receive on the sale? Calculate the factoring fee and describe how it is reported by Imperative Company. All else equal, how will this affect Imperative’s receivables turnover ratio in the future?
Answer to relevant QuestionsComplete all the requirements of M8-3, except assume that Extreme Fitness uses the direct write-off method. Note that this means Extreme does not have an Allowance for Doubtful Accounts balance. M8-3 a. Show how the company ...Assume Simple Co. had credit sales of $ 250,000 and cost of goods sold of $ 150,000 for the period. Simple uses the percentage of credit sales method and estimates that 1 percent of credit sales would result in uncollectible ...Microsoft Corporation develops, produces, and markets a wide range of computer software including the Windows operating system. Microsoft reported the following information about Net Sales Revenue and Accounts Receivable ...For each transaction listed in E8-4, indicate the amount and direction (+ or –) of effects on the financial statement accounts and on the overall accounting equation. E8-4 Prior to recording the following, Elite ...Mattel and Hasbro are two of the largest and most successful toymakers in the world, in terms of the products they sell and their receivables management practices. To evaluate their ability to collect on credit sales, ...
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