*NEW* ACC 225: Week Six Solution

ACC 225

Axia College of University of Phoenix (UoP)

Financial Accounting

Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)

ACC 225 Week 6 Solution

1. CheckPoint: Computing Inventory Balances and Lower of Cost or Market (Post in the Individual Forum – Due Day 2)
• Re-read Chapters 5 and 6
• Review Demonstration problem and solution. Try to complete sections on your own before reviewing solution.
• Resource: Fundamental Accounting Principles, pp. 247–249
• Complete Quick Study question 6-1 on p. 247 and Exercise 6-3 on p. 247 & Problem 6-3A on p. 252.

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2. Assignment: Estimating Inventory and Preparing Multiple-Step and Single-Step Income Statements (Post in the Individual Forum – Due Day 6)
• Resources: Fundamental Accounting Principles, pp. 251 & 256
• Complete Problems 5-4A on p. 212, 6-1B on p. 254, & 6-6A on p. 253 and 6-7A on p. 254.

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ACC 225: Week Six Solution

ACC 225

Axia College of University of Phoenix (UoP)

Financial Accounting

Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)

ACC 225 Week 6 Solution

CheckPoint: Computing Inventory Balances and Lower of Cost or Market
• Resource: Fundamental Accounting Principles, pp. 247-249
• Due Date: Day 4 [Individual] forum
• Complete Quick Study question QS 6-1 on p. 247 and Exercises 6-1 and 6-5 on pp. 248
and 249.
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Assignment: Estimating Inventory and Preparing Multiple-Step and Single-Step Income
Statements
• Resource: Fundamental Accounting Principles, pp. 251 and 256
• Due Date: Day 7 [Individual] forum
• Complete Problems 5-4A on p. 212, 6-1A on p. 251, and 6-6B and 6-7B on p. 256.
• Post your answers as an attachment.
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FIN 200: Week Six Solution

FIN 200

Axia College of University of Phoenix (UoP)

Introduction to Finance: Harvesting the Money Tree

Fin 200 Week 6 Solution

CheckPoint: Credit Policy Decisions

• Resource: Ch. 7 of Foundations of Financial Management
• Due Date: Day 5 [Individual forum]
• Complete Problem 17 on p. 220.

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Collins Office Supplies is considering a more liberal credit policy to increase
sales, but expects that 9 percent of the new accounts will be uncollectible. Collection
costs are 5 percent of new sales, production and selling costs are 78 percent,
and accounts receivable turnover is five times. Assume income taxes of
30 percent and an increase in sales of $80,000. No other asset buildup will be
required to service the new accounts.
a. What is the level of accounts receivable needed to support this sales
expansion?
b. What would be Collins’s incremental aftertax return on investment?
c. Should Collins liberalize credit if a 15 percent aftertax return on investment
is required?
Assume Collins also needs to increase its level of inventory to support
new sales and that inventory turnover is four times.
d. What would be the total incremental investment in accounts receivable and
inventory to support an $80,000 increase in sales?
e. Given the income determined in part b and the investment determined in
part d, should Collins extend more liberal credit terms?

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