Question

Snider Industries sells on terms of 2/10, net 45, Total sales for the year are $1,500,000. Thirty percent of customers pay on the 10^th day and take discounts; the other 70% pay, on average, 50 days after their purchases.

a. What is the day's sales outstanding?

b.What is the average amount of receivables?

c.What would happen to average receivables if Snider toughened its collection policy with the result that all nondiscount customers paid on the 45^th day?

Answer 1

011 : x B r for =+04-09 A 38 Days 1 a) Days of Sales Outstanding (DSO) 2 3 =10*30%+50*70% 4 b) Accounts Receivable (DSOxSales)/365 $ 156,164 c) New Days of Sales Outstanding (DSO) 34.50 Days =10*30%+45*70% Accounts Receivable (DSOxSales/365 $ 141,781 11. This allows Accounts Recievable to be reduced by $ 14,384

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