What is the average amount of receivables

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Reference no: EM131013074

McDowell Industries sells on terms of 3/10, net 40. Total sales for the year are $1,088,000, 40% of the customers pay on the 10^th day and take discounts, while the other 60% pay, on average,64 days after their purchases. Assume 365 days in year for your calculations.

a. What are the day's sales 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 the trade credit to customers who do not take the discount and pay on Day 64?

e. What would happen to McDowell's accounts receivables if McDowell toughened up on its collection policy with the result that all no discount customers paid on the 40^th day? Round your answer to two decimal places.

Reference no: EM131013074

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