Galambos Corporation had an average receivables collection period of 19 days in 2003.Galambos has stated that it wants to decrease its collection period in 2004 to match theindustry average of 15 days. Credit sales in 2003 were $300 million, and analysts expectcredit sales to increase to $400 million in 2004. To achieve the company’s goal of decreasing the collection period, the change in the average accounts receivable balance from 2003to 2004 that must occur is closest to:A . –$420,000.B . $420,000.C . $836,000.
Galambos Corporation had an average receivables collection period of 19 days in 2003.Galambos has stated that it wants to decrease its collection period in 2004 to match theindustry average of 15 days. Credit sales in 2003 were $300 million, and analysts expectcredit sales to increase to $400 million in 2004. To achieve the company’s goal of decreasing the collection period, the change in the average accounts receivable balance from 2003to 2004 that must occur is closest to:A . –$420,000.B . $420,000.C . $836,000.
Chapter18: The Management Of Accounts Receivable And Inventories
Section: Chapter Questions
Problem 10QTD
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Galambos Corporation had an average receivables collection period of 19 days in 2003.
Galambos has stated that it wants to decrease its collection period in 2004 to match the
industry average of 15 days. Credit sales in 2003 were $300 million, and analysts expect
credit sales to increase to $400 million in 2004. To achieve the company’s goal of decreasing the collection period, the change in the average accounts receivable balance from 2003
to 2004 that must occur is closest to:
A . –$420,000.
B . $420,000.
C . $836,000.
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