A supply company, sells on terms of3/10, net 30. Gross sales for the year are $1,200,000 and thecollections department estimates that 30% of the customers pay onthe tenth day and take discounts, 40% pay on the thirtieth day, andremaining 30% pay, on average, 40 days after the purchase. (Assume360 days /year.)

1. Calculate the firms averagecollection period.

2. Calculate the firms currentreceivables balance.

3. Calculate the firms newreceivables balance if the company toughened up on its collectionpolicy, with the result that all non-discount customers paid on the30^th day.