Route Canal Shipping Company has the following schedule for aging of accounts receivable: a. Fill in column

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Route Canal Shipping Company has the following schedule for aging of accounts receivable:

AGE OF RECEIVABLES April 20, 2015 (3) Age of Account Amounts Percent of Amount Due (1) (2) (4) Month of Sales April 0-30 $105,000 March 31-60 60,000 February 61-90 90,000 January 91-120 45,000 $300,000 Total receivables 100%


a. Fill in column ( 4) for each month.

b. If the firm had $1,440,000 in credit sales over the four-month period, compute the average collection period. Average daily sales should be based on a 120-day period.

c. If the firm likes to see its bills collected in 30 days, should it be satisfied with the average collection period?

d. Disregarding your answer to part c and considering the aging schedule for accounts receivable, should the company be satisfied?

e. What additional information does the aging schedule bring to the company that the average collection period may not show?

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Foundations of Financial Management

ISBN: 978-1259024979

10th Canadian edition

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta

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