a. Uhe the year end tota fo evaluite the firmis coledion system. b. If row of the firms sakes pcour between Juy and December, woudd tis affect the valily of your concheion hi part a? Explain. a. The ivvage colocion peiod is ders. (Round lo two deamal places.) Since the aveage age of moconaties t about 16 dirs beyond the net date, attention shoud be diected to accounts recetvatile management (Seled from the droo-down meris) 6. If ren of Ein liriss salew occur between July and December, would Eis affect the valdey of your concueion in part a? (Seied all the answess that apply) A. This may euptan the lower basover and higher average colection penod. 8. The year end accounts teceinitib bolance of $300,095 may not be a good mearure of the average accounts receivable, thereby cwusing the caiculated average collection penod lo be overstaled C. The soasonalty of sales abs sugpests the November toure (0-30 days overdue) 6 not a cause for grest concem. Accounts receivable management This table, , shows that Blair Supply had an end-of-year accounts receivable balance of $300,095. 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.) Since the average age of receivables is about 16 days beyond the net date, attention should be directed to accounts receivable management. (Select from the drop-down menu.) b. If 70% of the firm's sales occur between July and December, would this affect the validity of your conclusion in part a? (Select all the answers that apply.) A. This may explain the lower turnover and higher average collection period. B. The year-end accounts receivable balance of $300,095 may not be a good measure of the average accounts receivable, thereby causing the calculated average collection period to be overstated. C. The seasonality of sales also suggests the November figure (030 days overdue) is not a cause for great concern. D. About 13% of all accounts recelvable (those arising in July, August and September) are sixty days or more overdue and may be a sign of poor receivables management. (Click the icon here in order to copy the contents of the data table below into a spreadsheet.)
