P316 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

Use the year-end total to evaluate the firms collection system.

If 70% of the firms sales occur between July and December, would this information affect the validity of your conclusion in part a? Explain.

Problem P3-16
Part a. Average Collection Period
		Accounts Receivable
		Average Sales per Day
		Average collection period =					days