Kyoto Joe, Inc., sells earnings forecasts for Japanese securities. Its credit te
ID: 2701333 • Letter: K
Question
Kyoto Joe, Inc., sells earnings forecasts for Japanese securities. Its credit terms are 4.0/10, net 30. Based on experience, 45 percent of all customers will take the discount.
If Kyoto Joe sells 890 forecasts every month at a price of $1,725 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 4.0/10, net 30. Based on experience, 45 percent of all customers will take the discount.
Explanation / Answer
average collection period = 0.45 * 10 + 0.55 * 30 = 21 days
b) average balance sheet amount = 890 * 1725 * 0.45 * 10 /365 * 21 = 901.32
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