Essence of Skunk Fragrances, Ltd., sells 8,200 units of its perfume collection e

Question

Essence of Skunk Fragrances, Ltd., sells 8,200 units of its perfume collection each year at a price per unit of $430. All sales are on credit with terms of 1/10, net 40. The discount is taken by 60 percent of the customers Calculate the average collection period. Average collection period days What is the receivables turnover? (Use 365 days a year. Round your answer to 3 decimal places. (e.g. 32.161)) Receivables turnover times What is the amount of the company's average receivable? (Do not round intermediate calculations and o 2 decimal places. (e.g.,3 Average receivables

Explanation / Answer

1. 60% customers take 10 days and rest 40 days

means average number of days taken to receive funds = 0.6*10+40*0.4 = 22 days

average collection period = 22 days

2.  Receivable turnover = 365/avg collection period = 365/22 = 16.59

3. average receivables amount = 16.59*8200*430/365 = 160263.95$

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

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