Answered step by step

Verified Expert Solution

## Question

1 Approved Answer

# Maddox Resources has credit sales of $ 1 8 0 , 0 0 0 yearly with credit terms of net 3 0 days, which is

##
Maddox Resources has credit sales of $$180,000$ yearly with credit terms of net $30$ days, which is also the average collection period. Maddox does not offer a discount for early payment, so its customers take the full $30$ days to pay. $($Use $365$ days in a year.$)$ a$-1.$ What is the average receivables balance? $($Do not round intermediate calculations. Round the final answer to nearest whole dollar.$)$ Accounts receivable balance $ $14795$ a$-2.$ What is the receivables turnover? $($Round the final answer to $2$ decimal places.$)$ Receivables turnover $12\mathrm{.}17$ x b$.$ If Maddox offered a $2$ percent discount for payment in $10$ days and every customer took advantage of the new terms, what would the new average receivables balance be$?$ Use the full sales of $$180,000$ for your calculation of receivables. $($Do not round intermediate calculations. Round the final answer to nearest whole dollar.$)$ New receivable balance $ $4932$ c$-1.$ If Maddox reduces its bank loans, which cost $12$ percent, by the cash generated from reduced receivables, what will be the net gain or loss to the firm? Use the full sales of $$180,000$ for your calculation of receivables. $($Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Round the final answer to nearest whole dollar. Omit $ sign in your response.$)$ Net Change $ c$-2.$ Should Maddox Resources offer the discount? multiple choice $1$ Yes No d$-1.$ Assume the new trade terms of $2/10,$ net $30$ will increase sales by $20$ percent because the discount makes Maddox price competitive. If Maddox earns $16$ percent on sales before discounts, what will be the Net change in income? $($Do not round intermediate calculations. Round the final answer to nearest whole dollar.$)$ Net change in income $

Maddox Resources has credit sales of $$180,000$ yearly with credit terms of net $30$ days, which is also the average collection period. Maddox does not offer a discount for early payment, so its customers take the full $30$ days to pay. $($Use $365$ days in a year.$)$

a$-1.$ What is the average receivables balance? $($Do not round intermediate calculations. Round the final answer to nearest whole dollar.$)$

Accounts receivable balance $

$14795$

a$-2.$ What is the receivables turnover? $($Round the final answer to $2$ decimal places.$)$

Receivables turnover

$12\mathrm{.}17$

x

b$.$ If Maddox offered a $2$ percent discount for payment in $10$ days and every customer took advantage of the new terms, what would the new average receivables balance be$?$ Use the full sales of $$180,000$ for your calculation of receivables. $($Do not round intermediate calculations. Round the final answer to nearest whole dollar.$)$

New receivable balance $

$4932$

c$-1.$ If Maddox reduces its bank loans, which cost $12$ percent, by the cash generated from reduced receivables, what will be the net gain or loss to the firm? Use the full sales of $$180,000$ for your calculation of receivables. $($Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Round the final answer to nearest whole dollar. Omit $ sign in your response.$)$

Net Change $

c$-2.$ Should Maddox Resources offer the discount?

multiple choice $1$

Yes

No

d$-1.$ Assume the new trade terms of $2/10,$ net $30$ will increase sales by $20$ percent because the discount makes Maddox price competitive. If Maddox earns $16$ percent on sales before discounts, what will be the Net change in income? $($Do not round intermediate calculations. Round the final answer to nearest whole dollar.$)$

Net change in income $

## Step by Step Solution

There are 3 Steps involved in it

### Step: 1

### Get Instant Access to Expert-Tailored Solutions

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

### Step: 2

### Step: 3

## Ace Your Homework with AI

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

Get Started