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Han Corp's sales last year were $395,000, and its year-end receivables were $52,500. The firm sells on terms that call for customers to pay 30 days after the purchase, but some delay payment beyond Day 30. On average, how many days late do customers pay? Base your answer on this equation: DSO - Allowed credit period = Average days late, and use a 365-day year when calculating the DSO.

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    Daily Sales Outstanding (DSO) = 365 X (Average Accounts Receivable / Total Credit Sales) =>DSO = 365 *(60,000/435,000) =>DSO= 50.34 Customers are paying late by 50.34 - 45 = 5.34 days.

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