United Worldwide's accounts receivable totaled $1.75 million on August 31, 2009. A breakdown of these outstanding accounts on the basis of the month in which the credit sale was initially made follows. The firm extends net 30, EOM credit terms to its credit customers
| Month of Credit Sale |
Accounts Receivable |
| Aug-09 |
$640,000 |
| Jul-09 |
500,000 |
| Jun-09 |
164,000 |
| May-09 |
390,000 |
| April 2009 or before |
56,000 |
| Total (August 31, 2009) |
$1,750,000 |
a. Prepare an aging schedule for United Worldwide's August 31, 2009, accounts receivable balance.
b. Using your findings in part (a), evaluate the firm's credit and collection activities.
c. What are some probable causes of the situation discussed in part (b)?