I am having trouble with this problem. Please only help if you are sure of the c

Question

I am having trouble with this problem. Please only help if you are sure of the correct way to solve it. Explain thouroughly, please. Thank you!

Fitzgerald Company has credit terms of 2/15, n60. The historical payment patterns of its customers are as follows: 40 percent of customers pay in 15 days. · 57 percent of customers pay in 60 days. 3 percent of customers pay in 100 days. Annual sales are $730,000. Assume there are 365 days in a year. a. Calculate the average collection period (ACP). b. What is the accounts receivable (AR) assuming all goods are sold on credit?

Explanation / Answer

Average collection period:

= 15×40%+60×57%+100×3%

= 43.2 days

Accounts receivable:

= $730,000×43.2 days÷365 days

= $86,400

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.