Professional Documents
Culture Documents
Problems
Problems
Problems
Problems
7-2.
Oscar's checkbook shows a balance of $600. A recent statement from the bank
(received last week) shows that all checks written as of the date of the statement
have been paid except numbers 423 and 424, which were for $62and $40,
respectively. Since the statement date, checks 425, 426, and 427 have been
written for $32, $70, and $44, respectively.
There is a 75 percent probability that checks 423 and 424 have been paid by
this time. There is a 40 percent probability that checks 424, 426, and 427 have
been paid.
a. What is the total value of the five checks outstanding?
b. What is the expected value of payments for the five checks outstanding?
c. What is the difference between parts a and b? This represents a type of
float.
Solution:
Oscar's Checkbook
a. $62 + $40 + $32 +70 +44 = $248
b.
Probability check
Amount
has cleared
$62
*
75%
40
*
75%
32
*
40%
70
*
40%
44
*
40%
Expected
value
$ 46.50
30.00
12.80
28.00
17.60
$134.90 expected
value of payment
for 5 checks
outstanding
S-215
7-6.
Barney's Antique Shop has annual credit sales of $1,080,000 and an average
collection period of 40 days in 1996. Assume a 360-day year.
What is the company's average accounts receivable balance? Accounts
receivable are equal to the average daily credit sales times the average
collection period.
Solution:
Barney's Antique Shop
7-8.
40 average
collection period
= $120,000 average
accounts receivable
balance
Solution:
Mervyn's Fine Fashion
S-216
Accounts Receivable
Average daily credit sales
$80,000
Credit sales
360
7-11.
Fisk Corporation is trying to improve its inventory control system and has installed
an on- line computer at its retail stores. Fisk anticipates sales of 75,000 units per year,
an ordering cost of $8 per order, and carrying costs of $12.0 per unit.
a.
b.
c.
d.
Solution:
Fisk Corp.
a. EOQ =
2SO
2 75,000 $8
=
= 1,000 units
C
$1.20
= $ 600
= 600
= $1,200
S-218