A firm is planning for next year and has developed the following information What receivables balance should the firm plan for next year if management intends to reduce the ACP by five days? (Calculate using ending balances and a 360-day year) :

A) $1.035M
B) $1.150M
C) $1.265M
D) None of the above

Question

A firm is planning for next year and has developed the following information

What receivables balance should the firm plan for next year if management intends to reduce the ACP by five days? (Calculate using ending balances and a 360-day year) :

A) $1.035M
B) $1.150M
C) $1.265M
D) None of the above

Devan Vercaigne · Accepted Answer

Final Answer : A, Explanation :  Receivables balance = Annual credit sales / ACPCurrent receivables balance = $10.8M / 31 days * 360 days = $12.096MNew ACP = 31 days - 5 days = 26 daysNew receivables balance = $10.8M / 26 days * 360 days = $11.88MEnding receivables balance = ($12.096M + $11.88M) / 2 = $1.035M.

A firm is planning for next year and has developed the following information What receivables balance should the firm plan for next year if management intends to reduce the ACP by five days? (Calculate using ending balances and a 360-day year) :

A) $1.035M
B) $1.150M
C) $1.265M
D) None of the above

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A firm is planning for next year and has developed the following information What receivables balance should the firm plan for next year if management intends to reduce the ACP by five days? (Calculate using ending balances and a 360-day year) :A) $1.035MB) $1.150MC) $1.265MD) None of the above

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