The table below shows that Blair Supply had an end- of-year accounts receivable balance of $300,000. The

Question:

The table below shows that Blair Supply had an end- of-year accounts receivable balance of $300,000. The table also shows how much of the receivables balance originated in each of the previous 6 months. The company had annual sales of $2.4 million, and it normally extends 30-day credit terms to its customers.

Month of origin Accounts receivable
July $ ...............................................................3,875
August ............................................................2,000
September ...................................................34,025
October ........................................................15,100
November ....................................................52,000
December ..................................................193,000
Year-end accounts receivable ................$300,000

a. Use the year-end total to evaluate the firm’s collection system.
b. If 70% of the firm’s sales occur between July and December, would this information affect the validity of your conclusion in part a? Explain.

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...

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