Route Canal Shipping Company has the following schedule for aging of accounts re
ID: 2696838 • Letter: R
Question
Route Canal Shipping Company has the following schedule for aging of accounts receivable:
Age of Receivable
( 1) ( 2 ) ( 3 ) ( 4 )
Month of Sales Age of Account Amounts % of amount due
April 0-30 $195,360
March 31-60 $97,680
February 61-90 $122,100
January 91-120 $73,260
Total receivables $488,400 100%
a. Calculate the percentage of amount due for each month
b. If the firm had $1,584,000 in credit sales over the four-month period, compute the average collection period. Avg. daily sales should be based on a 120-day period.
c. If the firm likes to see its bills collected in 42 days, should it be satisfied with the average collection period?
d. Disregarding your answer to part c and considering the aging schedule for accounts receivable, should the company be satisfied?
Please show your answer in a way that I can learn to solve it myself, thanks!
Explanation / Answer
a) april=195360=488400=40%
march=97680/488400=20%
feb=122100/488400=25%
jan=73260/488400=15%
b)488400*120/1584000=37 days
c)no, its doesnt satisfies.it should be 37 days
d)company shoud not be satisfied
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