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Problem 16-05 Accounts Payable A chain of appliance stores, APP Corporation, purchases inventory with a net price of...

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Finance

Problem 16-05
Accounts Payable

A chain of appliance stores, APP Corporation, purchasesinventory with a net price of $700,000 each day. The companypurchases the inventory under the credit terms of 2/15, net 30. APPalways takes the discount, but takes the full 15 days to pay itsbills. What is the average accounts payable for APP? Round youranswer to the nearest dollar.

$  

Problem 16-06
Receivables Investment

Snider Industries sells on terms of 3/10, net 45. Total salesfor the year are $820,000. Thirty percent of customers pay on the10th day and take discounts; the other 70% pay, on average, 50 daysafter their purchases. Assume 365 days in year for yourcalculations.

  1. What is the days sales outstanding? Round your answer to onedecimal place.
    days
  2. What is the average amount of receivables? Round your answer tothe nearest dollar. Do not round intermediate calculations.
    $  
  3. What would happen to average receivables if Snider toughenedits collection policy with the result that all nondiscountcustomers paid on the 45th day? Round your answer to the nearestdollar. Do not round intermediate calculations.
    $

Answer & Explanation Solved by verified expert
3.6 Ratings (520 Votes)
Solution 1605 Average accounts payable Net inventory per day x Days in discount period Average accounts payable 700000 x 15 Average accounts payable 10500000    See Answer
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