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    DSO and Current Receivables Balance

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    The Holland sofa company sells on terms of 3/10, net 30. Gross sales for the year are $1.2 million and the collection department estimates that 30 percent of customers pay on the 10th day and take discounts; 40 percent pay on the 30th day; and the remaining 30 percent pay; on average, 40 days after the purchase. Assume 365 days per year.

    What is the DSO? What is the current receivables balance?

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    https://brainmass.com/business/receivables/dso-current-receivables-balance-528086

    Solution Preview

    The Holland sofa company sells on terms of 3/10, net 30.
    Gross sales for the year are $1.2 million and
    the collection department estimates that
    Group 1: 30 percent of customers pay on the 10th day and take discounts;
    Group 2: 40 percent pay on the 30th day;
    Group 3: the remaining 30 percent pay; on average, 40 days after the purchase.

    Assume 365 days per year.
    What is the DSO? What is the current receivables balance?

    SOLUTION
    Dear student,
    For this type of question you generally need to give a date of ...

    Solution Summary

    This question calculates the Days Sales Outstanding and the Current Receivables Balance for a company that sells some of its goods on credit. The credit terms are 3/10, net 30, which indicates that the firm gives a discount for payments that are received early. Using this information you are given two possible outcomes for this scenario.

    $2.19