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Suppose your firm receives a $ 4.01 million order on the last day of the year. You fill the order with $ 2.08 million worth of inventory. The customer picks up the entire order the same day and pays $ 1.07 million upfront in​ cash; you also issue a bill for the customer to pay the remaining balance of $ 2.94 million within 40 days. Suppose your​ firm's tax rate is 0 % ​(i.e., ignore​ taxes). Determine the consequences of this transaction for each of the​ following:
a. Revenues
b. Earnings
c. Receivables
d. Inventory
e. Cash

Respuesta :

truonghanhduyen

Answer:

a. Revenues of this order : $ 4.01 million

b. Earnings  of this order: $1.93 million

c. Receivables  will increase $2.94 million

d. Inventory  will decrease $2.08 million

e. Cash will increase $1.07 million

Explanation:

The consequences of this transaction for each of the​ following:

a. Revenues : $ 4.01 million

Revenues is the value of order

b. Earnings  = Revenues - cost of inventory = $ 4.01 million - $ 2.08 million

= $1.93 million

c. Receivables  of this order = Revenues - upfront = $ 4.01 million - $ 1.07 million

= $2.94 million

d. Inventory  will decrease $2.08 million which you use to fill the order

e. Cash will increase $1.07 million, which is the amount customer up-front.

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