Kyoto Joe, Inc., sells earnings forecasts for Japanese securities. Its credit te
ID: 2624246 • Letter: K
Question
Kyoto Joe, Inc., sells earnings forecasts for Japanese securities. Its credit terms are 2.5/15, net 30. Based on experience, 20 percent of all customers will take the discount.
If Kyoto Joe sells 830 forecasts every month at a price of $2,025 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))
a. What is the average collection period for Kyoto Joe? (Use 365 days a year.)
Explanation / Answer
Average collection period = 15*0.2 + 30*0.8
= 27 days
Total sales during the year = (830*12*2025)
= $20169000
Its average balance sheet amount in accounts receivable = 20169000 * (27/365)
= $1491953.42
Average collection period = 15*0.2 + 30*0.8
= 27 days
Total sales during the year = (830*12*2025)
= $20169000
Its average balance sheet amount in accounts receivable = 20169000 * (27/365)
= $1491953.42
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