Chapter 3, Problem 3.16P

Accounts receivable management The table below shows that Blair Supply had an end-of-year accounts receivable balance of $300,000. The table also shows how much of the receivables balance originated in each of the previous 6 months. The company had annual sales of $2.4 million, and it normally extends 30-day credit terms to its customers.

Month of origin	Accounts receivable
July	$3,875
August	2,000
September	34,025
October	15,100
November	52,000
December	193,000
Year-end accounts receivable	$300,000

1. a. Use the year-end total to evaluate the firm’s collection system.
2. b. If 70% of the firm’s sales occur between July and December, would this information affect the validity of your conclusion in part a? Explain.