Working Capital Management Age of Receivables April 30, 20X1 Percent of Amount Due Month of Sales April March. February January Age of Account 0-30 31-60 61-90 91-120 Amounts $131,250 93,750 112,500 37,500 $375,000 Total receivables 100%
Block, S., Hirt, G., & Danielsen, B. (2017). Foundations of
Chapter 7, Problem #11:
Route Canal Shipping Company has the following schedule for aging of accounts receivable:
A. Fill in column (4) for each month. (Please see uploaded image of chart)
B. If the firm had $1,500,000 in credit sales over the four-month period, compute the average collection period. Average daily sales should be based on a 120 day-period.
C. If the firm likes to see it bills collected in 35 days, should it be satisfied with the average colleciton period?
D. Disregarding your answer to part C and considering the aging schedule for accounts receivable, should the company be satisfied?
E. What additional information does the againg schedule bring to the company that the average collection period may not show?
Thank you in advance!
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