=+LG 5 P16–17 Accounts receivable as collateral Clothing Unlimited decided to apply for a $100,000 loan from its local bank. Clothing Unlimited will provide accounts receivable as collateral. The bank’s policy states that accounts normally paid within 30 days of the end of the credit period may be accepted as collateral. However, the age of the account is not allowed to exceed the customer’s average payment period. The accounts receivable, average age of accounts, and average payment period of customers are summarized in the table below. Clothing Unlimited offers credit terms of net 30 days.

Customer Account receivable Average age of account Average payment period of customer A $ 5,000 20 days 30 days B 18,000 40 45 C 9,500 60 35 D 14,000 18 25 E 8,750 52 45 F 4,500 14 20 G 1,500 10 15 H 20,000 20 45