Route Canal Shipping Company

Age of Receivables

April 30, 20X1

April 0-30 131250 FORMULA

March 31-60 93750 FORMULA

February 61-90 112500 FORMULA

January 91-120 37500 FORMULA

Total receivables $375,000 0%

b. If the firm had $1,500,000 in credit sales over the four-month period, compute the average collection period.

Average collection period FORMULA days

c. If the firm likes to see its bills collected in 35 days, should it be satisfied with the average collection period?

d. Disregarding your answer to part c and considering the aging schedule for accounts receivable, should the company be satisfied?

e. What additional information does the aging schedule bring to the company that the average collection period may not show?