1. What are the four elements of a firms credit policy? To what extent can firms set their own credit policies as opposed to having to accept policies that are dictated by the competition? (8 marks)
2. The Kijabe Electro Company, a small manufacturer of cell phone began operations on October 1, 2017. Its credit sales for the first 6 months of operations were as follows:

Months	Credit sales
October 2017	Ksh. 5,000,000
November 2017	10,000,000
December 2017	12,000,000
January 2018	10,500,000
February 2018	14,000,000
March 2018	16,000,000

Throughout this entire period, the firms credit customers maintained a constant payments pattern: Twenty percent paid in the month of sale, 30% paid in the month following the sale and 50% paid in the second month following the sale.

Required:

1. What was Kijabes receivable balance at the end of December 2017 and at the end of March 2017? (6marks)
2. Assume 90 days per calendar a quarter. What were the average daily sales (ADS) and day sales outstanding (DSO) for the first quarter and for the second quarter? What were the cumulative ADS and DSO for the first half-year? (6 marks)
3. Construct an aging schedule as of March 31 2018. Use account ages of 0-30, 31-60 and 61-90 days. (4 marks)
4. Construct the uncollected balances schedule for the second quarter of March 31, 2018. ( 3 marks)

(Total: 17 marks)

1. What are the four elements of a firms credit policy? To what extent can firms set their own credit policies as opposed to having to accept policies that are dictated by the competition? (8 marks)
2. The Kijabe Electro Company, a small manufacturer of cell phone began operations on October 1, 2017. Its credit sales for the first 6 months of operations were as follows:

Months	Credit sales
October 2017	Ksh. 5,000,000
November 2017	10,000,000
December 2017	12,000,000
January 2018	10,500,000
February 2018	14,000,000
March 2018	16,000,000

Throughout this entire period, the firms credit customers maintained a constant payments pattern: Twenty percent paid in the month of sale, 30% paid in the month following the sale and 50% paid in the second month following the sale.

Required:

1. What was Kijabes receivable balance at the end of December 2017 and at the end of March 2017? (6marks)
2. Assume 90 days per calendar a quarter. What were the average daily sales (ADS) and day sales outstanding (DSO) for the first quarter and for the second quarter? What were the cumulative ADS and DSO for the first half-year? (6 marks)
3. Construct an aging schedule as of March 31 2018. Use account ages of 0-30, 31-60 and 61-90 days. (4 marks)
4. Construct the uncollected balances schedule for the second quarter of March 31, 2018. ( 3 marks)

(Total: 17 marks)