Chapter 3: 11BP_b (page 221)

Route Canal Shipping Company has the following schedule for aging of accounts receivable:
b. If the firm had $1,500,000 in credit sales over the four-month period, compute the average collection period. Average daily sales should be based on a 120-day period.

Short Answer

Expert verified

The average collection period will be 30 days.

Step by step solution

Information provided in the question

Credit sales = $1,500,000

Accounts receivables = $375,000

Calculation of average collection period

The average collection period will be 30 days.

$\begin{array}{rcl} Average collection period & = & \frac{Accounts receivables}{(\frac{Credit sales}{120})} \\ = & \frac{$ 375, 000}{(\frac{$ 1, 500, 000}{120})} \\ = & 30 days \end{array}$

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January	\(100,000
February	\)93,000
March	\(25,000
April	\)25,000
May	\(20,000
June	\)35,000
July	\(45,000
August	\)45,000
September	\(55,000
October	\)85,000
November	\(105,000
December	\)123,000
Total annual sales	\(756,000

Route Canal Shipping Company has the following schedule for aging of accounts receivable:
b. If the firm had $1,500,000 in credit sales over the four-month period, compute the average collection period. Average daily sales should be based on a 120-day period.

Short Answer

Step by step solution

Information provided in the question

Calculation of average collection period

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Most popular questions from this chapter

Recommended explanations on Business Studies Textbooks

Introduction to Business

Operational Management

Strategic Analysis

Human Resources

Strategic Direction

Nature of Business

Study anywhere. Anytime. Across all devices.

Route Canal Shipping Company has the following schedule for aging of accounts receivable:b. If the firm had $1,500,000 in credit sales over the four-month period, compute the average collection period. Average daily sales should be based on a 120-day period.

Short Answer

Step by step solution

Information provided in the question

Calculation of average collection period

One App. One Place for Learning.

Most popular questions from this chapter

Recommended explanations on Business Studies Textbooks

Introduction to Business

Operational Management

Strategic Analysis

Human Resources

Strategic Direction

Nature of Business

Study anywhere. Anytime. Across all devices.

Route Canal Shipping Company has the following schedule for aging of accounts receivable:
b. If the firm had $1,500,000 in credit sales over the four-month period, compute the average collection period. Average daily sales should be based on a 120-day period.