Question
Accounts receivable management. An evaluation of the books of Blair Supply, which follows, gives the end-of-year accounts receivable balance, which is believed to consist of
Accounts receivable management. An evaluation of the books of Blair Supply, which follows, gives the end-of-year accounts receivable balance, which is believed to consist of amounts originating in the months indicated. The company had annual sales of $2.4 million. The firm extends 30-day credit terms.
Month of Origin Accounts Receivable
July $ 3,875
August 2,000
September 34,025
October 15,100
November 52,000
December 193,000
Year End Accounts Receivable $ 300,000
a. Use the year-end total to evaluate the firms collection system. b. If 70% of the firms sales occur between July and December, would this information affect the validity of your conclusion in part a? Explain.
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