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ACP and Accounts Receivable

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A company sells earnings forecasts for Japanese securities. Its credit terms are 2/10, net 30. Based on experience, 70 percent of all customers will take the discount.

a. What is the average collection period for the company?
b. If the company sells 1,500 forecasts every month at a price of $1,900 each, what is its average balance sheet amount in accounts receivable?

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This solution shows step-by-step calculation to determine the average collection period and average account receivables.

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