Question

please be clear

Kyoto Joe, Inc., sells earnings forecasts for Japanese securities. Its credit terms are 2/20, net 40. Based on experience, 65 percent of all customers will take the discount. a. What is the average collection period for the company? (Use 365 days a year. Do not round Intermediate calculations and round your answer to 2 decelmal places, e.g., 32.16.) b. If the company sells 1,520 forecasts every month at a price of $1,300 each, what is its average balance sheet amount in accounts receivable? (Use 365 days a year. Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. days Average collection period Average accounts receivable b.

Answer 1

Average Collection period = (65% * 20 Days)+ (35% * 40 Days)

Average Collection period = 27 Days

Average Accounts receivable = (1,520 * $1,300)*12*(27/365)

Average Accounts receivable = $1,754,038.36

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