Essence of Skunk Fragrances, Ltd., sells 7,600 units of its perfume collection e

Question

Essence of Skunk Fragrances, Ltd., sells 7,600 units of its perfume collection each year at a price per unit of $810. All sales are on credit with terms of 1.5/15, net 60. The discount is taken by 75 percent of the customers.

Calculate the average collection period. (Round your answer to 2 decimal places. (e.g., 32.16))

What is the receivables turnover? (Use 365 days a year. Do not round intermediate calculations and round your final answer to 3 decimal places. (e.g., 32.161))

What is the amount of the company

Essence of Skunk Fragrances, Ltd., sells 7,600 units of its perfume collection each year at a price per unit of $810. All sales are on credit with terms of 1.5/15, net 60. The discount is taken by 75 percent of the customers.

Explanation / Answer

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Essence of skunk fragrances., Ltd., sells 6,100 units of its perfume collection each year at a price per unit of $470. All sales on credit with terms of 3/10, net 40. The discount taken by 40 percent of the customers.

a. Average collection period (days)? round answer to 2 decimal places.

b. Receivable turnover (times)? use 365 days a year. do not round intermediate calculations and round your final answer to 3 decimal places.

c. Average receivables ($)? Do not round intermediate calculations and round your final answer to 2 decimal places.

a. Average collection period (days)? round answer to 2 decimal places.

Avg Collecton Period = 10days * 40% + 40 days * 60% = 28 Days

b. Receivable turnover (times)? use 365 days a year. do not round intermediate calculations and round your final answer to 3 decimal places.

Receivable turnover = 365/Avg Collecton Period = 365/28 = 13.036 times

c. Average receivables ($)? Do not round intermediate calculations and round your final answer to 2 decimal places.

Average receivables = Sales/365 * Avg Collecton Period = 2867000/365 * 28 = $ 219,934.25

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