Speedy Manufacturing Company’s end-of-year accounts receivable balance consists of amounts originating in the months indicated below. The company had annual sales of $3.2 million. The company extends 30-day credit terms.

a. Use the year-end total to evaluate the company’s collection system.
b. If 75% of the company’s sales occur between July and December, would this information affect the validity of your conclusion in part a? Explain.

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Month of origin July August September October November December Accounts receivable $ 2,500 3,600 63,250 Year-end accounts receivable 21,100 54,000 298,000 $442,450