Accounts receivable management. An evaluation of the books of Blair Supply, whic

Question

Accounts receivable management. An evaluation of the books of Blair Supply, which
follows, gives the end-of-year accounts receivable balance, which is believed to consist
of amounts originating in the months indicated. The company had annual sales
of $2.4 million. The firm extends 30-day credit terms.

Month of Origin Accounts Receivable

July $ 3,875

August 2,000

September 34,025

October 15,100

November 52,000

December 193,000

Year End Accounts Receivable $ 300,000

a. Use the year-end total to evaluate the firm’s collection system.
b. If 70% of the firm’s sales occur between July and December, would this information
affect the validity of your conclusion in part a? Explain.

Explanation / Answer

Accounts receivable management. An evaluation of the books of Blair Supply, whic

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