Kantorovich Company normally takes 29 days to pay for its average daily credit p
ID: 2624556 • Letter: K
Question
Kantorovich Company normally takes 29 days to pay for its average daily credit purchases of $2,400. Its average daily sales are $3,400, and it collects accounts in 24 days. What is its net credit position? Note that a negative position implies receivables exceed payables.
Kantorovich Company normally takes 29 days to pay for its average daily credit purchases of $2,400. Its average daily sales are $3,400, and it collects accounts in 24 days. What is its net credit position? Note that a negative position implies receivables exceed payables.
Explanation / Answer
computation of net credit
accounts receivables = average daily credit sales * average collection period receivable
= $3400 * 24
= $81600
accounts payables = average daily credit purchases * average payment period payable
= $2400 * 29
= $ 69600
accounts receivables are exceeds accounts payables
$81600 are exceeds $69600.
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