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 3.0/10, net 60. Based on experience, 30 percent of all customers will take the discount.

If Kyoto Joe sells 1,320 forecasts every month at a price of $1,675 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 3.0/10, net 60. Based on experience, 30 percent of all customers will take the discount.

Explanation / Answer

average collection period = 0.3 * 10 + 0.7 * 60 = 45 days

b) average balance = 1320 * 1675 * 45 * (12/365) = 3271068.49

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