McDowell Industries: days sales outstanding, receivables

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• Accounts Receivable and Days Sales Outstanding

  198283 McDowell Industries: days' sales outstanding, average amount of AR, use of discount McDowell Industries sells on terms of 3/10, net 30.

• Days sales outstanding

  60172 Accounting/Recivables investment McDowell industries sells on terms of 3/10, net 30. Total sales for the year are $912,500.

• Accounts Receivable/cost of trade credit

  Forty percent of customers pay on the 10th day and take discounts; the other 60% pay, on average, 40 days after their purchases. a) What is the days sales outstanding? b) What is the average amount of receivables?

• A chain of appliance stores, APP Corporation, purchases inventory with a net price of $500,000 each day. The company purchases the inventory under the credit terms of 2/15, net 40. APP always takes the discount, but takes the full 15 days to pay its bills. What is the average accounts payable for APP?

  APP always takes the discount, but takes the full 15 days to pay its bills. What is the average accounts payable for APP? Receivable Investment McDonald Industries sell on terms of 3/10, net 30. Total sales for the year are $912,000.

• Trade Credit, implied annual yield, exchange rate

  Total sales for the year are $912,500. Forty percent of the customers pay on the 10th day and take discounts; the other 60% pay, on average, 40 days after their purchases. a. What are the days sales outstanding? b.

• Days sales outstanding and average amount of receivables

  Days Sales Outstanding = Average amount of receivables / Daily sales = 22 days =55000 / 2500 Answer: Days Sales Outstanding = 22 days Average receivables = $55,000 The days sales outstanding

• Cost of trade credit: Grunewalds's non discount customers

  Gross Sales/Day=4562500/365=12500 Average receivables of discount customers =12500*10*0.5=62500 Note Half of the customers took discounts Average receivables of non-discount customers = 437500-62500=375000 Days sales outstanding for non-discount

• Receivables

  Average amount of receivables = Daily Sales X Days sale outstanding Average amount = 4,250,000/365 X 40.9 = $476,233. We can check this as 30% of sales = 1,275,000. This is outstanding for 15 days.

• Receivables

  ANSWERS Days sales outstanding as receivables = (accounts receivables/total credit sales)xnumber of days Total credit sales = 100000+105000+60000=265000 Number of days = 3 months = 90 days DSO = 125000/265000x90 days = 42 days Receivables are calculated