Suppose your firm receives a $4.22 million order on the last day of the year. Yo

Question

Suppose your firm receives a $4.22 million order on the last day of the year. You fill the order with $1.77 million worth of inventory. The customer picks up the entire order the same day and pays $1.16 million up front in cash; you also issue a bill for the customer to pay the remaining balance of $3.06 millon within 40 days. Suppose your firm's tax rate is 0% (ie, ignore taxes). Determine the consequences of this transaction for each of the following: a. Revenues b. Earnings c. Receivables d. Inventory e. Cash Revenues will increase by 54.22 million. (Select trom the drop-down menu and round to two decimal places.) b. Earnings Earnings will increase by S 2.45 million. (Select from the drop-down menu and round to two decimal places.) c. Receivables Receivables will increase by $ 3.06 million. (Select from the drop-down menu and round to two decimal places.) d. Inventory Inventory will decrease by $ 1.29 million. (Select from the drop-down menu and round to two decimal places.)

Explanation / Answer

D
Inventory will decrease by $1.77 million
E
Cash will increase by $1.16 million

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