Question 1 abc company writes 330 checks a day for an

Question

• Question 1
  

  	ABC Company writes 330 checks a day for an average amount of $489 each. These checks generally clear the bank in 2 days. In addition, the firm generally receives an average of $176,042 a day in checks that are deposited immediately. Deposited funds are available in 1 days. What is the firm's net float? Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
  	Correct Answer:  146,698.00 ± 0.5% Response Feedback: Net Float = Disbursement Float + Collection Float Disbursement Float = number of checks written * $check amount * number of days to clear the checks Collection Flat = $checks collected * number of days to clear the checks

• Question 2
  

  	ABC Company has a cash cycle of 12.62 days, an operating cycle of 19.02 days, and an average collection period of 4 days. The company reported cost of goods sold of $266,677. What is the company's average balance in Accounts Payable? Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box
  	Correct Answer:  4,675.98 ± 0.5% Response Feedback: Cash Cycle = Operating Cycle - Accounts Payable Period Cash Cycle = Operating Cycle - 365(1/AP Turnover) (OC-CC)=365(AP/COGS)

• Question 3

  	Compute the Accounts Payable (A/P) period based on the following information:  Average A/P balance = $50,659 Annual Cost of Goods Sold = $455,648 Assume 365 days Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.
  	Correct Answer:  40.58 ± 0.5% Response Feedback: A/P period = 365/(COGS/Accounts Payable)

• Question 4
  

  	ABC Company sells 3,845 chairs a year at an average price per chair of $167. The carrying cost per unit is $37.98. The company orders 500 chairs at a time and has a fixed order cost of $64 per order. The chairs are sold out before they are restocked. What is the economic order quantity?  Enter your answer rounded off to two decimal points. Do not enter comma in the answer box. For example, if your answer is 12.345 then enter as 12.35 in the answer box.
  	Correct Answer:  113.83 ± 0.5% Response Feedback: EOQ=(2*T*F/C)0.5

• Question 5
  

  	Month Sales $ Month Sales $ Jan         13,720 July         27,515 Feb         49,438 Aug         42,513 Mar         42,513 Sep         13,720 Apr         27,515 Oct         42,513 May         13,720 Nov         49,438 June         49,438 Dec         27,515 Sales are collected as follows: In the month of Sales: 34% In the next month: 22% After 2 months: 13% After 3 months: remainder is collected Calculate the cash collection for November. Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
  	Correct Answer:  41,124.41 ± 0.5%

• Question 6
  

  	As of this morning, your firm had a ledger balance of $4,699 with no outstanding deposits or checks. Today, your firm deposited 9 checks in the amount of $483 each and wrote a check in the amount of $796. What is the amount of the collection float as of the end of the day?  Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
  	Correct Answer:  4,347.00 ± 0.5% Response Feedback: Collection Float =total $ amount of checks deposited

• Question 7
  

  	As of this morning, your firm had a ledger balance of $3,074 with no outstanding deposits or checks. Today, your firm deposited 7 checks in the amount of $442 each and wrote 4 checks in the amount of $981. What is the amount of the disbursement float as of the end of the day?  Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
  	Correct Answer:  3,924.00 ± 0.5% Response Feedback: Disbursement Float =total $ amount of checks witten

• Question 8
  

  	On July 15th, you purchased $10,000 worth of goods. The terms of the sale were 1/6, net 38. What is the effective annual rate of interest for the credit period for this sale?  Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.
  	Correct Answer:  12.15 ± 0.5% Response Feedback: Solve for effective rate

• Question 9
  

  	Month Sales $ Month Sales $ Jan         44,202 July         20,562 Feb         19,221 Aug         25,659 Mar         25,659 Sep         44,202 Apr         20,562 Oct         25,659 May         44,202 Nov         19,221 June         19,221 Dec         20,562 Sales are collected as follows: In the month of Sales: 40% In the next month: 33% After 2 months: 9% After 3 months: remainder is collected Calculate the cash collection for December. Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
  	Correct Answer:  24,833.40 ± 0.5%

• Question 10
  

  	ABC Company sells 4,217 chairs a year at an average price per chair of $167. The carrying cost per unit is $55.48. The company orders 348 chairs at a time and has a fixed order cost of $161 per order. The chairs are sold out before they are restocked. How many orders will company place if it follows the economic order quantity model? Enter your answer rounded off to two decimal points. Do not enter comma in the answer box. For example, if your answer is 12.345 then enter as 12.35 in the answer box.
  	Correct Answer:  26.96 ± 0.5% Response Feedback: EOQ=(2*T*F/C)0.5 Optimal number of orders = T/EOQ

• Question 11
  

  	The terms of the sale were 3/8, net 43. What is the effective annual rate of interest?  Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.
  	Correct Answer:  37.39 ± 0.5% Response Feedback: Solve for effective rate

• Question 12
  

  	Month Sales $ Month Sales $ Jan         15,046 July         30,778 Feb         32,975 Aug         22,230 Mar         22,230 Sep         15,046 Apr         30,778 Oct         22,230 May         15,046 Nov         32,975 June         32,975 Dec         30,778 Sales are collected as follows: In the month of Sales: 32% In the next month: 27% After 2 months: 5% Remainder is considered as bad debt and is not collected. Calculate the cash collection for June. Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
  	Correct Answer:  16,153.32 ± 0.5%

• Question 13
  

  	ABC Corporation currently has an inventory turnover of 27.38, a payables turnover of 13.4, and a receivables turnover of 13.94. How many days are in the operating cycle?   Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.
  	Correct Answer:  39.51 ± 0.5% Response Feedback: Operating cycle = Inventory period + A/R Period = 365/ITR + 365/ART

• Question 14
  

  	ABC Company has an average collection period of 29 days and factors all of its receivables immediately at a 1.5 percent discount. Assume all accounts are collected in full. What is the firm's effective cost of borrowing? Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.
  	Correct Answer:  20.95 ± 0.5% Response Feedback: Solve for effective rate

• Question 15
  
  

  ABC Company sells 2,014 chairs a year at an average price per chair of $126. The carrying cost per unit is $39.72. The company orders 365 chairs at a time and has a fixed order cost of $82.8 per order. The chairs are sold out before they are restocked. What are the total shortage costs?  Enter your answer rounded off to two decimal points. Do not enter comma or $ in the answer box. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

  Correct Answer:  456.87 ± 0.5% Response Feedback: Total Shortage Costs = Fixed Costs * T/Q

• Question 16
  
  

  	Compute the cash cycle based on the following information:  Average Collection Period = 51 Accounts Payable Period = 46 Average Age of Inventory = 41
  	Correct Answer:  46 ± 0.5% Response Feedback: Cash Cycle = Inventory Period + A/R Period - A/P Period

• Question 17
  

  	ABC Company has annual sales of $413,375 and cost of goods sold of $198,600. The average accounts receivable balance is $52,359. How many days on average does it take the firm to collect its accounts receivable? Assume 365 days. Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.
  	Correct Answer:  46.23 ± 0.5% Response Feedback: Average Collection Period (ACP) = 365/(Sales/Accounts Receivable)

• Question 18
  

  	Month Sales $ Month Sales $ Jan         18,254 July         20,698 Feb         47,909 Aug         44,723 Mar         44,723 Sep         18,254 Apr         20,698 Oct         44,723 May         18,254 Nov         47,909 June         47,909 Dec         20,698 The company has estimated expenses as follows:  General and administrative expenses: $9,293 Material purchases are 74 percent of sales. Material purchases are paid in the month following the purchase. Interest payment per month: $3,596 Rent expenses per quarter starting March: $6,525 Calculate the cash outflows for June. Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
  	Correct Answer:  32,921.96 ± 0.5% Response Feedback: Suppose that material purchases are x% of sales. Purchases are paid in the month following the purchases. Therefore, purchases in May = x% of Sales of May  This amount will be paid after one month in June. Therefore, cash outflows in June = x% of Sales of May + Gen & Admin Exp + Interest Expense + Rent Expense

• Question 19
  

  	ABC Company has annual sales of $400,000 and cost of goods sold of $335,709. The accounts payable period is 50.78 days. What is the average accounts payable balance?  Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.
  	Correct Answer:  46,704.94 ± 0.5% Response Feedback: Accounts Payable Period = 365/(COGS/Accounts Payable) Re-arranging, we get,  Accounts Payable = Accounts Payable Period*COGS/365

• Question 20
  

  	ABC Company sells 2,587 chairs a year at an average price per chair of $153. The carrying cost per unit is $18.42. The company orders 380 chairs at a time and has a fixed order cost of $109.7 per order. The chairs are sold out before they are restocked. What are the total carrying costs?  Enter your answer rounded off to two decimal points. Do not enter comma or $ in the answer box. For example, if your answer is 12.345 then enter as 12.35 in the answer box.
  	Correct Answer:  3,499.80 ± 0.5% Response Feedback: Total Carrying Costs = Q/2*carrying cost per unit

• Question 21
  

  	ABC Corporation currently has an inventory turnover of 9.54, a payables turnover of 10.26, and a receivables turnover of 12.65. How many days are in the cash cycle?   Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.
  	Correct Answer:  31.54 ± 0.5% Response Feedback: Cash cycle = Inventory period + A/R Period - A/P Period = 365/ITR + 365/ART - 365/APT