RECEIVABLES INVESTMENT: McEwan Industries sells on terms of 3/10, net 30. Total sales for the...
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RECEIVABLES INVESTMENT: McEwan Industries sells on terms of 3/10, net 30. Total sales for the year are $1,921,000; 40% of the customers pay on the 10th day and take discounts, while the other 60% pay, on average 70 days after their purchases.
a. What are the days outstanding?
b. What is the average amount of receivables?
c. What is the percentage cost of trade credit to customers who take the discount?
d. What is the percentage cost of trade credit to customers who do not take the discount and pay in 70 days?
e. What would happen to McEwan's accounts receivable if it toughened up on its collection policy with the result that all non-discount customers paid on the 30th day?
Account Receivable:
Account receivable is a current asset that is created when a company sells goods and services on credit to the customers. Account receivable is recorded on the balance sheet as a current asset.
Answer and Explanation: 1
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Day's sales outstanding can be computed as follow:
Customer pay on 10 th day = 40%
Customer pay on 70 th day = 60%
Day's sales outstanding =...
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Accounts Receivable Journal Entries
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Chapter 3 / Lesson 20
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Learn what accounts receivables (AR) are and understand their purpose in business. Explore different examples of AR and what the journal entry for it is.
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