Brown Corporation had an average days-of-sales- outstanding (DSO) period of 19 days in 2009. An analyst thinks that Brown's DSO will decline in 2010 (because of expected improvements in the company's collections department) to match the industry average of 15 days. Total sales (all on credit) in 2009 were $300 million, and Brown expects total sales (all on credit) to increase to $320 million in 2010. To achieve the lower DSO, the change in the average accounts receivable balance from 2009 to 2010 that must occur is closest to: A. -$3.51 million B. $2.46 million C. $2.46 million D. $3.51 million

Brown Corporation had an average days-of-sales- outstanding (DSO) period of 19 days in 2009. An analyst thinks that Brown's DSO will decline in 2010 (because of expected improvements in the company's collections department) to match the industry average of 15 days. Total sales (all on credit) in 2009 were $300 million, and Brown expects total sales (all on credit) to increase to $320 million in 2010. To achieve the lower DSO, the change in the average accounts receivable balance from 2009 to 2010 that must occur is closest to: A. -$3.51 million B. $2.46 million C. $2.46 million D. $3.51 million

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter22: Master Budget (master)

Section: Chapter Questions

Problem 4R: Suppose the company has to revise its estimates because of a downturn in the economy. Unit sales for...

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Brown Corporation had average days of sales outstanding of 19 days in the most recent fi scal year. Brown wants to improve its credit policies and collection practices and decrease its collection period in the next fi scal year to match the industry average of 15 days. Credit sales in the most recent fi scal year were $300 million, and Brown expects credit sales to increase to $390 million in the next fi scal year. To achieve Brown’s goal of decreasing the collection period, the change in the average accounts receivable balance that must occur is closest to: C . –$1.22 million.
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Brown corporation had....Accounting question
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