Question

The Bell Heim Company began operations on January 1 and has the following credit sales for the first six months of operation: Month January February March April May June Credit Sales $100,000 $120,000 $140,000 $160,000 $105,000 $ 50,000 Throughout this entire period, the firm’s credit customers maintained a constant payments pattern as follows: 30% paid in the month of sales, 50% paid in the first month following the sale, and 20% paid in the second month following the sale. 5. Assume 90 days per calendar quarter. What is the days sales outstanding (DSO) for the first quarter and second quarter? 6. Construct an aging schedule as of June 30. Use account ages of 0-30, 31-60, and 61-90 days. 7. Construct an uncollected balances schedule for the second quarter as of June 30

Answer 1

	Quarter first				Quarter second			Uncollected at end of June 30	Outstandings in days
	Jan	Feb	Mar	Outstanding	Apr	May	Jun	Outstanding	0-30 days	31-60 days	61-90 days
Credit sales	100000	120000	140000		160000	105000	50000
Collection:
Jan	30000	50000	20000
Feb		36000	60000	24000	24000
Mar			42000	98000	70000	28000
Apr					48000	80000	32000
May						31500	52500	21000	21000		Nil
Jun							15000	35000	25000	10000	Nil
Total	30000	86000	122000	122000	142000	139500	99500	56000	46000	10000	0
5) Outstanding sales at the end of quarter first = 122000
Outstanding at the end of quarter second = 56000
6) Agewise outstanding as of June 30:
0-30	46000
31-60	10000
61-90	0
7) Uncollected sales as of June 30 = 56000