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

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Definitions:

Middle-Class Reformers

Individuals or groups typically from the middle socioeconomic class advocating for social, economic, or political reforms.

Social Conditions

The circumstances and factors that influence the quality of life and opportunities available to people within a society.

Gilded Age

A term describing the late 19th century in the United States, characterized by rapid economic growth, material excess, and widespread political corruption.

Second Industrial Revolution

A period of rapid industrial growth and technological advancement in the late 19th and early 20th centuries, marked by the widespread use of steel, electric power, and internal combustion engines.