Cannon Company Has Enjoyed a Rapid Increase in Sales in Recent

question 28

Multiple Choice

Cannon Company has enjoyed a rapid increase in sales in recent years,following a decision to sell on credit.However,the firm has noticed a recent increase in its collection period.Last year,total sales were $1 million,and $250,000 of these sales were on credit.During the year,the accounts receivable account averaged $41,664.It is expected that sales will increase in the forthcoming year by 50 percent,and,while credit sales should continue to be the same proportion of total sales,it is expected that the days sales outstanding will also increase by 50 percent.If the resulting increase in accounts receivable must be financed by external funds,how much external funding will Cannon need?

• A) $41,664
• B) $52,086
• C) $47,359
• D) $106,471
• E) $93,750

---

Definitions:

Internalizing Behavior

Behaviors that are directed inward, such as anxiety, depression, and withdrawal, often as a response to external stressors.

Relative Poverty

A condition where people lack the minimum amount of income needed in order to maintain the average standard of living in the society in which they live.

Credit Card Debt

The accumulated unpaid balances owed on credit card accounts.

McKinney-Vento Homeless Assistance Act

A U.S. federal law that provides federal money for homeless shelter programs and aims to address the problems of homelessness in America.