Problem :Aging of accounts receivable
Route Canal Shipping Company has the following schedule for aging of accounts receivable:
|
Age of Receivables April 30, 2013
|
| (1) |
(2) |
(3) |
(4) |
Month of
Sales |
Age of
Account |
Amounts |
Percent of
Amount Due |
| April |
0-30 |
$ |
212,220 |
_______ |
| March |
31-60 |
|
94,320 |
_______ |
| February |
61-90 |
|
141,480 |
_______ |
| January |
91-120 |
|
23,580 |
_______ |
|
|
|
|
|
| Total receivables |
|
$ |
471,600 |
100% |
|
|
|
|
|
a. Calculate the percentage of amount due for each month.
| Month of Sales |
Percent of Amount Due |
| April |
|
% |
|
| March |
|
% |
|
| February |
|
% |
|
| January |
|
% |
|
|
|
|
|
| Total receivables |
|
100 % |
|
|
|
|
|
b. If the firm had $1,572,000 in credit sales over the four-month period, compute the average collection period. Average daily sales should be based on a 120-day period.
c. If the firm likes to see its bills collected in 41 days, should it be satisfied with the average collection period?
• Yes
• No
d. Disregarding your answer to part c and considering the aging schedule for accounts receivable, should the company be satisfied?
• Yes
• No