HA520 Unit 6 Assignment

Problem 16.5, page 602
A) The textbook states that 30 percent of customers pay on the 10th, 40 percent pay on the 13th and 30 percent pay on the 40th day after purchase.
ACP = (0.3 x 10) + (0.4 x 13) + (0.3 x 40)
ACP = (3) + (5.2) + (12)
ACP = 20.2
The average collection period is approximately 20 days.
B) The gross sales as stated by the textbook is $1,200,000 for the year.
Receivables balance = ADB x ACP
The textbook also states that there are only 360 days within the year. The ADB can be calculated as
1200000 / 360 = 3333.3333 or $3,333.33 as the average daily billings.
Receivables balance = 3333.33 x 20.2
Receivables balance = 67333.266
The receivables balance is $67,333.26
C)