Kyoto Joe, Inc., sells earnings forecasts for Japanese securities. Its credit te

Question

Kyoto Joe, Inc., sells earnings forecasts for Japanese securities. Its credit terms are 4.0/15, net 90. Based on experience, 60 percent of all customers will take the discount.

If Kyoto Joe sells 1,080 forecasts every month at a price of $2,000 each, what is its average balance sheet amount in accounts receivable? (Use 365 days a year. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Kyoto Joe, Inc., sells earnings forecasts for Japanese securities. Its credit terms are 4.0/15, net 90. Based on experience, 60 percent of all customers will take the discount.

Explanation / Answer

1) The average collection period will be 0.60*15 + 0.40*90 = 45 days

2) The average accounts receivable = 1080*2000*12 *45/365 = $ 3,195,616.44

Answer:

If Kyoto Joe sells 1,080 forecasts every month at a price of $2,000 each, what is its average balance sheet amount in accounts receivable? (Use 365 days a year. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

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