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Accounts receivable management An evaluation of the books of Blair

Question : Accounts receivable management An evaluation of the books of Blair : 1614

Accounts receivable management An evaluation of the books of Blair Supply,, gives the end-of-year accounts receivable balance, which is believed to consist of amounts originating in the months indicated. The company had annual sales of $2.40 million. The firm extends 30-day credit terms. Use the year-end total to evaluate the firm's collection system. If 70% of the firm's sales occur between July and December, would this affect the validity of your conclusion in part a? Explain. The average collection period is days. (Round to two decimal places.) Since the average age of receivables is about 16 days beyond the net date, attention should be directed to accounts receivable management. (Select from the drop-down menu.) If 70% of the firm's sales occur between July and December, would this affect the validity of your conclusion in part a? (Select all the answers that apply.) This may explain the lower turnover and higher average collection period. The December accounts receivable balance of 300,000 may not be a good measure of the average accounts receivable, thereby causing the calculated average collection period to be overstated. The seasonality of sales also suggests the November figure (0-30 days overdue) is not a cause for great concern. About 13% of all accounts receivable (those arising in July, August and September) are sixty days or more overdue and may be a sign of poor receivables management.

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