accounts receivable
Question
Route Canal Shipping Company has the following schedule for aging of accounts receivable:
| Age of Receivables April 30, 2013 | ||||
| (1) | (2) | (3) | (4) | |
| Month of Sales | Age of Account | Amounts | Percent of Amount Due | |
| April | 0–30 | $ | 253,750 | _______ |
| March | 31–60 | 145,000 | _______ | |
| February | 61–90 | 217,500 | _______ | |
| January | 91–120 | 108,750 | _______ | |
| Total receivables | $ | 725,000 | 100% | |
| a. | Calculate the percentage of amount due for each month. |
| Month of Sales | Percent of Amount Due | ||
| April | % | ||
| March | % | ||
| February | % | ||
| January | % | ||
| Total receivables | 100 % | ||
| b. | If the firm had $1,740,000 in credit sales over the four-month period, compute the average collection period. Average daily sales should be based on a 120-day period. |
| Average collection period | days |
| c. | If the firm likes to see its bills collected in 49 days, should it be satisfied with the average collection period? |
| NoYes |
| d. | Disregarding your answer to part c and considering the aging schedule for accounts receivable, should the company be satisfied? |
| YesNo |
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