Route Canal Shipping Company has the following schedule for aging of accounts receivable: Age of Receivables April 30, 20X1 (1) (2) (3) (4) Month of Sales Age of Account Amounts Percent of Amount Due April 0–30 $ 283,500 _______ March 31–60 63,000 _______ February 61–90 252,000 _______ January 91–120 31,500 _______ Total receivables $ 630,000 100% Calculate the percentage of amount due for each month. If the firm had $1,680,000 in credit sales over the four-month period, compute the average collection period. Average daily credit sales should be based on a 120-day period.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Route Canal Shipping Company has the following schedule for aging of
| Age of Receivables April 30, 20X1 | |||
| (1) | (2) | (3) | (4) |
|---|---|---|---|
| Month of Sales | Age of Account | Amounts | Percent of Amount Due |
| April | 0–30 | $ 283,500 | _______ |
| March | 31–60 | 63,000 | _______ |
| February | 61–90 | 252,000 | _______ |
| January | 91–120 | 31,500 | _______ |
| Total receivables | $ 630,000 | 100% |
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Calculate the percentage of amount due for each month.
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If the firm had $1,680,000 in credit sales over the four-month period, compute the average collection period. Average daily credit sales should be based on a 120-day period.
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