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2 Jun 2019
P3â16 Accounts receivable management An evaluation of the books of Blair Supply, which
follows, gives the end-of-year accounts receivable balance, which is believed to consist
of amounts originating in the months indicated. The company had annual sales
of $2.4 million. The firm extends 30-day credit terms.
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
a. Use the year-end total to evaluate the firmâs collection system.
b. If 70% of the firmâs sales occur between July and December, would this information
affect the validity of your conclusion in part a? Explain.
Average Collection Period = accounts receivable/average sales per day
P3â16 Accounts receivable management An evaluation of the books of Blair Supply, which
follows, gives the end-of-year accounts receivable balance, which is believed to consist
of amounts originating in the months indicated. The company had annual sales
of $2.4 million. The firm extends 30-day credit terms.
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
a. Use the year-end total to evaluate the firmâs collection system.
b. If 70% of the firmâs sales occur between July and December, would this information
affect the validity of your conclusion in part a? Explain.
| Average Collection Period = accounts receivable/average sales per day | |
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Elin HesselLv2
5 Jun 2019
