Nutty Productions Inc. generated service revenue of $ 30,000 and income from operations of $ 10,000. The company estimates that, had it extended credit it would have instead generated $ 60,000 of service revenue, but it would have incurred $ 25,000 of additional expenses for wages and bad debts. Using these estimates, calculate the amount by which Income from Operations would increase (decrease). Should the company extend credit?
Answer to relevant QuestionsComplete the following table by computing the missing amounts (?) for the following independent cases. 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 ...Assume that Simple Co. had credit sales of $ 250,000 and cost of goods sold of $ 150,000 for the period. Simple uses the aging method and estimates that the appropriate ending balance in the Allowance for Doubtful Accounts ...Refer to the information about Sears given in E8-14. Required: Complete the following table indicating the direction of the effect (+ for increase, – for decrease, and NE for no effect) of each transaction during ...Innovative Tech Inc. (ITI) uses the percentage of credit sales method to estimate bad debts each month and then uses the aging method at year-end. During November, ITI sold services on account for $ 100,000 and estimated ...
Post your question