The Holder Company's accounting are factored by Blair Finance. The following table lists all eight factored accounts along with the amount factored, the date due, and the status as of May 30. List the sums that Blair owed Holder as of May 30 along with the dates on which they were paid. Assume that the 2% commission paid to the factor is subtracted from the total amount of the remittance.

$$\begin{array}{crll} \text { Account } & \text { Amount } & \text { Date due } & \text { Status on May 30 } \\ \hline \text { A } & \$ 200,000 & \text { May 30 } & \text { Collected May 15 } \\ \text { B } & 90,000 & \text { May 30 } & \text { Uncollected } \\ \text { C } & 110,000 & \text { May 30 } & \text { Uncollected } \\ \text { D } & 85,000 & \text { June 15 } & \text { Collected May 30 } \\ \text { E } & 120,000 & \text { May 30 } & \text { Collected May 27 } \\ \text { F } & 180,000 & \text { June 15 } & \text { Collected May 30 } \\ \text { G } & 90,000 & \text { May 15 } & \text { Uncollected } \\ \text { H } & 30,000 & \text { June 30 } & \text { Collected May 30 } \end{array}$$

Springer Products wants to borrow $80,000 from a nearby bank, and it will use its receivables as collateral. As long as the average age of the account does not exceed the customer's average payment term, the bank will accept any accounts that are typically paid within 30 days of the end of the credit period as collateral. The following table displays the accounts receivable for Springer, their typical ages, and the typical payment duration for each client. Net 30-day terms are extended by the business.

$$\begin{array}{crcc} \text { Customer } & \begin{array}{c} \text { Account } \\ \text { receivable } \end{array} & \begin{array}{c} \text { Average age } \\ \text { of account } \end{array} & \begin{array}{c} \text { Average payment } \\ \text { period of customer } \end{array} \\ \hline \text { A } & \$ 20,000 & 10 \text { days } & 40 \text { days } \\ \text { B } & 6,000 & 40 & 35 \\ \text { C } & 22,000 & 62 & 50 \\ \text { D } & 11,000 & 68 & 65 \\ \text { E } & 2,000 & 14 & 30 \\ \text { F } & 12,000 & 38 & 50 \\ \text { G } & 27,000 & 55 & 60 \\ \text { H } & 19,000 & 20 & 35 \end{array}$$

After accounting for returns and allowances, the bank will advance 75% against the acceptable collateral provided by the company. How much money can Springer take out a loan on these accounts?

Springer Products wants to borrow $80,000 from a nearby bank, and it will use its receivables as collateral. As long as the average age of the account does not exceed the customer's average payment term, the bank will accept any accounts that are typically paid within 30 days of the end of the credit period as collateral. The following table displays the accounts receivable for Springer, their typical ages, and the typical payment duration for each client. Net 30-day terms are extended by the business.

$$\begin{array}{crcc} \text { Customer } & \begin{array}{c} \text { Account } \\ \text { receivable } \end{array} & \begin{array}{c} \text { Average age } \\ \text { of account } \end{array} & \begin{array}{c} \text { Average payment } \\ \text { period of customer } \end{array} \\ \hline \text { A } & \$ 20,000 & 10 \text { days } & 40 \text { days } \\ \text { B } & 6,000 & 40 & 35 \\ \text { C } & 22,000 & 62 & 50 \\ \text { D } & 11,000 & 68 & 65 \\ \text { E } & 2,000 & 14 & 30 \\ \text { F } & 12,000 & 38 & 50 \\ \text { G } & 27,000 & 55 & 60 \\ \text { H } & 19,000 & 20 & 35 \end{array}$$

To account for returns and allowances, the bank reduces collateral by 10%. What level of collateral is permissible under this circumstance?

The goal of Kansas City Castings (KCC) is to use accounts receivable as collateral to secure the largest loan feasible. The business offers net-30-day credit. The following table displays the sums due by KCC's 12 credit clients, the typical age of each account, and the typical payment period for each customer:

$$\begin{array}{crcc} \text { Customer } & \begin{array}{c} \text { Account } \\ \text { receivable } \end{array} & \begin{array}{c} \text { Average age } \\ \text { of account } \end{array} & \begin{array}{c} \text { Average payment } \\ \text { period of customer } \end{array} \\ \hline \text { A } & \$ 37,000 & 40 \text { days } & 30 \text { days } \\ \text { B } & 42,000 & 25 & 50 \\ \text { C } & 15,000 & 40 & 60 \\ \text { D } & 8,000 & 30 & 35 \\ \text { E } & 50,000 & 31 & 40 \\ \text { F } & 12,000 & 28 & 30 \\ \text { G } & 24,000 & 30 & 70 \\ \text { H } & 46,000 & 29 & 40 \\ \text { I } & 3,000 & 30 & 65 \\ \text { J } & 22,000 & 25 & 35 \\ \text { K } & 62,000 & 35 & 40 \\ \text { L } & 80,000 & 60 & 70 \end{array}$$

Which accounts will be accepted if the bank accepts all accounts that can be collected in 45 days or fewer provided that the client has a history of paying within 45 days? How much money in total does the accounts receivable collateral represent? (Take note that accounts receivable with an average age larger than the typical payment time for the customer are also excluded.)

Springer Products wants to borrow $80,000 from a nearby bank, and it will use its receivables as collateral. As long as the average age of the account does not exceed the customer's average payment term, the bank will accept any accounts that are typically paid within 30 days of the end of the credit period as collateral. The following table displays the accounts receivable for Springer, their typical ages, and the typical payment duration for each client. Net 30-day terms are extended by the business.

$$\begin{array}{crcc} \text { Customer } & \begin{array}{c} \text { Account } \\ \text { receivable } \end{array} & \begin{array}{c} \text { Average age } \\ \text { of account } \end{array} & \begin{array}{c} \text { Average payment } \\ \text { period of customer } \end{array} \\ \hline \text { A } & \$ 20,000 & 10 \text { days } & 40 \text { days } \\ \text { B } & 6,000 & 40 & 35 \\ \text { C } & 22,000 & 62 & 50 \\ \text { D } & 11,000 & 68 & 65 \\ \text { E } & 2,000 & 14 & 30 \\ \text { F } & 12,000 & 38 & 50 \\ \text { G } & 27,000 & 55 & 60 \\ \text { H } & 19,000 & 20 & 35 \end{array}$$

Determine how much money Springer Products has in eligible accounts receivable collateral.

The goal of Kansas City Castings (KCC) is to use accounts receivable as collateral to secure the largest loan feasible. The business offers net-30-day credit. The following table displays the sums due by KCC's 12 credit clients, the typical age of each account, and the typical payment period for each customer:

$$\begin{array}{crcc} \text { Customer } & \begin{array}{c} \text { Account } \\ \text { receivable } \end{array} & \begin{array}{c} \text { Average age } \\ \text { of account } \end{array} & \begin{array}{c} \text { Average payment } \\ \text { period of customer } \end{array} \\ \hline \text { A } & \$ 37,000 & 40 \text { days } & 30 \text { days } \\ \text { B } & 42,000 & 25 & 50 \\ \text { C } & 15,000 & 40 & 60 \\ \text { D } & 8,000 & 30 & 35 \\ \text { E } & 50,000 & 31 & 40 \\ \text { F } & 12,000 & 28 & 30 \\ \text { G } & 24,000 & 30 & 70 \\ \text { H } & 46,000 & 29 & 40 \\ \text { I } & 3,000 & 30 & 65 \\ \text { J } & 22,000 & 25 & 35 \\ \text { K } & 62,000 & 35 & 40 \\ \text { L } & 80,000 & 60 & 70 \end{array}$$

In addition to the criteria in the previous section, the bank acknowledges that returns and allowances will cost it 5% of credit sales. Furthermore, the bank will only loan up to 80% of the eligible collateral (after adjusting for returns and allowances). How much money would this financing source be able to provide?

Give an overview of the fundamental characteristics of the warehouse receipt loan for using inventory as collateral for short-term loans, and contrast how it is used.

With a nearby commercial bank, Cumberland Furniture seeks to form a prearranged borrowing agreement. The terms of a line of credit with a bank are 3.30% over prime rate, with a yearly reduction to zero for a 30-day period. The rate is 2.80% over prime with a commitment charge of 0.50% on the average unused balance for an identical revolving credit agreement. The required compensatory balance for both loans is 20% of the total amount borrowed. (Note: Cumberland has no money deposited with the bank as of right now.) Right now, the prime rate is 8%. Borrowing caps total $4 million for both agreements. Regardless of the loan agreement it chooses to utilise, the company anticipates borrowing$2 million on average per year. If the business does anticipate borrowing, it will typically use half the available funding, which What kind of agreement would you suggest for the borrower? Reasons why?

The price of commercial paper is frequently reduced. Fan Corporation recently sold a $1 million dollar issue of 90-day commercial paper. The company has already received$978,000. (Note: Assume a year with 365 days.) What effective yearly rate will the company pay, assuming the paper is rolled over every 90 days during the year, if a brokerage charge of $9,612 was paid from the original proceeds to an investment banker for selling the issue?

Compute the following items for the statement of cash flows: a. Beginning and ending Plant Assets, Net, are $125,000 and$115,000, respectively. Depreciation for the period was $19,000, and purchases of new plant assets were$45,000. Plant assets were sold at a $10,000 gain. What were the cash proceeds of the sale? b. Beginning and ending Retained Earnings are$44,000 and $69,000, respectively. Net income for the period was$61,000, and stock dividends were $10,000. How much were cash dividends?

With a nearby commercial bank, Cumberland Furniture seeks to form a prearranged borrowing agreement. The terms of a line of credit with a bank are 3.30% over prime rate, with a yearly reduction to zero for a 30-day period. The rate is 2.80% over prime with a commitment charge of 0.50% on the average unused balance for an identical revolving credit agreement. The required compensatory balance for both loans is 20% of the total amount borrowed. (Note: Cumberland has no money deposited with the bank as of right now.) Right now, the prime rate is 8%. Borrowing caps total $4 million for both agreements. Regardless of the loan agreement it chooses to utilise, the company anticipates borrowing$2 million on average per year. What is the revolving credit agreement's effective yearly rate? Calculate the ratio of the firm's effective use of money to the amount of money it will pay in interest and commitment fees.

The following adjusted trial balance contains the accounts and year-end balances of Cruz Company as of December 31. (1) Prepare the December 31 closing entries for Cruz Company. Assume the account number for Income Summary is 901. (2) Prepare the December 31 post-closing trial balance for Cruz Company. Note: The A. Cruz, Capital account balance was $47,600 on December 31 of the prior year.

The price of commercial paper is frequently reduced. Fan Corporation recently sold a $1 million dollar issue of 90-day commercial paper. The company has already received$978,000. (Note: Assume a year with 365 days.) When using commercial paper to finance its operations, what effective yearly rate will the company pay, assuming it is renewed every 90 days throughout the year?

Kempton Enterprises has bonds outstanding with a $1,000 face value and 10 years left until maturity. They have an 11% annual coupon payment, and their current price is$1,185. The bonds may be called in 5 years at 109% of face value (Call price=$1,090). a. What is the yield to maturity? b. What is the yield to call if they are called in 5 years? c. Which yield might investors expect to earn on these bonds? Why? d. The bond’s indenture indicates that the call provision gives the firm the right to call the bonds at the end of each year beginning in Year 5. In Year 5, the bonds may be called at 109% of face value; but in each of the next 4 years, the call percentage will decline by 1%.Thus, in Year 6, they may be called at 108% of face value; in Year 7, they may be called at 107% of face value; and so forth. If the yield curve is horizontal and interest rates remain at their current level, when is the latest that investors might expect the firmto call the bonds?