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ACCOUNTS RECEIVABLE MANAGEMENT 4. Farfalle Inc. had credit sales of P3,500,000 last year, with a DSO of 35 days. What was the company's average receivables balance for a 365-day year?

ACCOUNTS RECEIVABLE MANAGEMENT 4. Farfalle Inc. had credit sales of P3,500,000 last year, with a DSO of 35 days. What was the company's average receivables balance for a 365-day year?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please answer numbers 4 and 5 with complete solutions that are original not copy-paste. Thank you so much.

ACCOUNTS RECEIVABLE MANAGEMENT 4. Farfalle Inc. had credit sales of P3,500,000 last year, with a DSO of 35 days. What was the company's average receivables balance for a 365-day year? 5. The Fettucini Company has budgeted P40.5 million in sales for the coming year. The credit sales will be for 80% of overall sales at terms of n/30. Fettucini forecasts that relaxing credit requirements will raise credit sales by 20%. Furthermore, it will lengthen the average collection period from 30 to 40 days. Based on a 360-day year, how much would a proposed relaxation of credit requirements result in an improvement in the average accounts receivable balance?
Transcribed Image Text:ACCOUNTS RECEIVABLE MANAGEMENT 4. Farfalle Inc. had credit sales of P3,500,000 last year, with a DSO of 35 days. What was the company's average receivables balance for a 365-day year? 5. The Fettucini Company has budgeted P40.5 million in sales for the coming year. The credit sales will be for 80% of overall sales at terms of n/30. Fettucini forecasts that relaxing credit requirements will raise credit sales by 20%. Furthermore, it will lengthen the average collection period from 30 to 40 days. Based on a 360-day year, how much would a proposed relaxation of credit requirements result in an improvement in the average accounts receivable balance?
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