Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 17

Estimate Sales Revenues

EZ-Credit, Inc., has $80 million in consumer loans with an average interest rate of 13.5 percent. The bank also has $64 million in home equity loans with an average interest rate of 9 percent. Finally, the company owns $6 million in corporate securities with an average rate of 6 percent.

EZ-Credit estimates that next year its consumer loan portfolio will rise to $84 million and the interest rate will fall to 12 percent. Its home equity loans will fall to $60 million with an average interest rate of 8 percent, and its corporate securities portfolio will increase to $16 million with an average rate of 7 percent.

Required

Estimate EZ-Credit’s revenues for the coming year.

Step 1 of 3

Sales:

Sales is defined as the transaction between the customer and seller, in which commodity is exchanged in return with the money. In simple world sales are selling of goods or service by charging money.