Question

1.
Receivables Investment Snider Industries sells on terms of 2/10, net 35. Total sales for the year are $500,000. Thirty percent of customers pay on the 10th day and take discounts; the other 70% pay, on average, 40 days after their purchases. Assume a 365-day year. a. What is the days sales outstanding? Do not round intermediate calculations. Round your answer to the nearest whole number. days b. What is the average amount of receivables? Do not round intermediate calculations. Round your answer to the nearest dollar. $ C. What would happen to average receivables if Snider toughened its collection policy with the result that all nondiscount customers paid on the 35th day? Do not round intermediate calculations. Round your answer to the nearest dollar. $
2.

Answer 1

1)

D13 x fic =+D4-D10 A B с D E 1 a) Days of Sales Outstanding (DSO) 2 31.0 =10*30%+40*70% Days 3 (DSOxSales)/365 $ 42,466 =D1*500000/365 4 b) Accounts Receivable 5 6 7 c) New Days of Sales Outstanding (DSO) 8 9 10 Accounts Receivable 11 12 27.50 Days =10*30%+35*70% (DSOxSales)/365 $ 37,671 =D7*500000/365 13 This allows Accounts Recievable to be reduced by $ 4,795

*Please rate thumbs up