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 3.0/15. net 90. Based on experience, 32 percent of all customers will take the discount. What is the average collection period for Kyoto Joe? (Use 365 days a year.) If Kyoto Joe sells 810 forecasts ever month at a price of $1,925 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))

Explanation / Answer

Average collection period = credit period / 365

= 25 days

Average balance =

Total sale = 810 per month, price = $ 1925

Sale value (in $ ) = 810 *1925 = 154000

Average balance in account receivable = 154000 * 32% = 49280

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