Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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Chapter 22, Problem 8P
Monitoring of Receivables
The Russ Fogler Company, a small manufacturer of cordless telephones, began operations on January 1. Its credit sales for the first 6 months of operations were as follows:
Throughout this entire period, the firm’s credit customers maintained a constant payments pattern: 209b paid in the month of sale, 309b paid in the first month following the sale, and 509b paid in the second month following the sale.
- a. What was Fogler’s receivables balance at the end of March and at the end of June?
- b. Assume 90 days per calendar quarter. What were the average daily sales (ADS) and days sales outstanding (DSO) for the first quarter and for the second quarter? What were the cumulative ADS and DSO for the first half-year?
- c. Construct an aging schedule as of June 30. Use account ages of 0-30, 31-60, and 61-90 days.
- d. Construct the uncollected balances schedule for the second quarter as of June 30.
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Students have asked these similar questions
Accounts receivable management This table,, shows that Blair Supply had an end-of-year accounts receivable balance of $299,915. The table also shows how much of the receivables balance originated in each of the previous six months. The company had annual sales
of $2.40 million and it normally extends 30-day credit terms to its customers.
a. Use the year-end total to evaluate the firm's collection system.
b. If 70% of the firm's sales occur between July and December, would this affect the validity of your conclusion in part a? Explain.
a. The average collection period is days. (Round to two decimal places.)
Accounts receivable management This table,, shows that Blair Supply had an end-of-year accounts receivable balance of $300,060 The table also shows how much of the receivables balance originated in each
of the previous six months. The company had annual sales of $2.40 million and it normally extends 30-day credit terms to its customers.
a. Use the year-end total to evaluate the firm's collection system.
b. If 70% of the firm's sales occur between July and December, would this affect the validity of your conclusion in part a? Explain.
a. The average collection period is days. (Round to two decimal places.)
Data table
(Click on the icon located on the top-right corner of the data table below in order to
copy its contents into a spreadsheet.)
Month of Amounts receivable origin
July
$3,880
August
2,005
September
33,995
October
15,150
November
52,005
December
193,025
Year-end accounts receivable
$300,060
- X
Calculating the Average Collection Period Trout Lumber Yard has a current accounts receivable balance of $527,164. Credit sales for the year just ended were $6,787,626. What is the receivables turnover? The days’ sales in receivables? How long did it take, on average, for credit customers to pay off their accounts during the past year?
Chapter 22 Solutions
Intermediate Financial Management (MindTap Course List)
Ch. 22 - Prob. 1QCh. 22 - Prob. 2QCh. 22 - Is it true that if a firm calculates its days...Ch. 22 - Firm A had no credit losses last year, but 1% of...Ch. 22 - Indicate by a (+), (), or (0) whether each of the...Ch. 22 - Cost of Bank Loan On March 1, Minnerly Motors...Ch. 22 - Cost of Bank Loan Mary Jones recently obtained an...Ch. 22 - Del Hawley, owner of Hawleys Hardware, is...Ch. 22 - Gifts Galore Inc. borrowed 1.5 million from...Ch. 22 - Relaxing Collection Efforts The Boyd Corporation...
Ch. 22 - Tightening Credit Terms Kim Mitchell, the new...Ch. 22 - Effective Cost of Short-Term Credit Yonge...Ch. 22 - Monitoring of Receivables
The Russ Fogler Company,...Ch. 22 - Prob. 10PCh. 22 - Prob. 1MCCh. 22 - Prob. 2MCCh. 22 - Prob. 3MCCh. 22 - Prob. 4MCCh. 22 - Prob. 5MCCh. 22 - Prob. 6MCCh. 22 - Prob. 7MCCh. 22 - Assume that it is now July of Year 1 and that the...Ch. 22 - Now assume that it is several years later. The...Ch. 22 - Prob. 10MCCh. 22 - Prob. 11MCCh. 22 - Prob. 12MCCh. 22 - Prob. 13MCCh. 22 - Prob. 14MCCh. 22 - Suppose the firm makes the change but its...
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