You Are Considering Opening a Lockbox

question 23

Essay

You are considering opening a lockbox.Calculate the net benefit of the lockbox per day given the information provided.
$$\begin{array}{l}\begin{array} { | l | r | } \hline\text { Data: }\\\hline \text { Average number of daily payments to lockbox } & 150 \\\hline \text { Average value of payment } & \$ 1,200 \\\hline \text { Rate of interest per day } & 0.02 \% \\\hline \text { Savings in mailing time (days) } & 1.2 \\\hline \text { Savings in processing time (days) } & 0.8 \\\hline \text { Bark charge per cheque } & \$ 0.26 \\\hline\end{array}\end{array}$$

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Definitions:

Expenses Accounts

Accounts that track money spent or costs incurred in a company’s operations to generate revenue.

Rent Expense

The cost incurred for utilizing a property or equipment for business purposes, recognized as an expense in the accounting period it is incurred.

Net Income

The company's net income following the deduction of all costs and taxes from the total income.

Income Summary

An account to which the revenues and expenses are transferred in order to close the books; it reflects the net income or loss at the end of a period.