Problem: The Holland sofa company sells on terms of 3/10, net 30. Gross sales for the year are $1.2 million and the collection department estimates that 30 percent of customers pay on the 10th day and take discounts; 40 percent pay on the 30th day; and the remaining 30 percent pay; on average, 40 days after the purchase. Assume 365 days per year.
What is the DSO? What is the current receivables balance?