Question

Kantorovich company normally takes 24 days to pay for its average daily credit purchases of $1,700. it has average daily sales of $2,700, and collects accounts in 19 days. what is its net credit position?

a) $1,000
b) $1,700
c) $2,700
d) $4,000

Answer 1

Kantorovich company's net credit position is calculated by subtracting total payable from total receivable, resulting in $10,500. However, this figure does not match any of the given options, indicating a possible error in the question itself.

Step-by-step explanation:

To calculate the net credit position of Kantorovich company, we need to understand two key figures: the average receivables and payables. The company collects its average daily sales in 19 days and has an average daily sales of $2,700. We multiply the daily sales by the collection period to determine the total receivables, which is 19 days * $2,700/day = $51,300. Similarly, the company normally takes 24 days to pay for its average daily credit purchases of $1,700. We multiply the daily purchases by the payment period to get the total payables, which is 24 days * $1,700/day = $40,800.

Now we subtract the payables from the receivables to find the company's net credit position: $51,300 (receivables) - $40,800 (payables) = $10,500. This figure is not among the provided options, indicating that there might be a mistake in the problem statement. However, if we assume the 'b' answer choice was meant to be the net credit position and not just the daily credit purchase amount, then choice 'b' $1,700 does not accurately represent the net credit position calculated.