Question
In: Finance
The Russ Fogler Company, a small manufacturer of cordless telephones, began operations on January 1. Its...
The Russ Fogler Company, a small manufacturer of cordless
telephones, began operations on January 1. Its credit sales for the
first 6 months of operations were as follows:
Month Credit Sales
January $ 75,000
February 125,000
March 145,000
April 130,000
May 165,000
June 185,000
Throughout this entire period, the firm’s credit customers
maintained a constant payments pattern: 25% paid in the month of
sale, 35% paid in the first month following the sale, and 40% paid
in the second month following the sale.
What was Fogler’s receivables balance at the end of March and
at the end of June? Do not round intermediate calculations. Round
your answers to the nearest dollar.
March receivables: $
June receivables: $
Assume 90 days per calendar quarter. What were the average
daily sales (ADS) and days sales outstanding (DSO) for the first
quarter and for the second quarter? Do not round intermediate
calculations. Round ADS answers to the nearest dollar and DSO
answers to one decimal place.
1st Quarter ADS: $
1st Quarter DSO: days
2nd Quarter ADS: $
2nd Quarter DSO: days
What were the cumulative ADS and DSO for the first half-year?
Do not round intermediate calculations. Round ADS answer to the
nearest dollar and DSO answer to one decimal place.
Cumulative Quarter ADS: $
Cumulative Quarter DSO: days
Solutions
Expert Solution
Following is the table for sales and payments made by credit customers:
| Months | January | February | March | April | May | June | July | August |
| Credit Sales | 75,000.00 | 125,000.00 | 145,000.00 | 130,000.00 | 165,000.00 | 185,000.00 | ||
| Payment for January credit sales | 18,750.00 | 26,250.00 | 30,000.00 | |||||
| Payment for February credit sales | 31,250.00 | 43,750.00 | 50,000.00 | |||||
| Payment for March credit sales | 36,250.00 | 50,750.00 | 58,000.00 | |||||
| Payment for April credit sales | 32,500.00 | 45,500.00 | 52,000.00 | |||||
| Payment for May credit sales | 41,250.00 | 57,750.00 | 66,000.00 | |||||
| Payment for June credit sales | 46,250.00 | 64,750.00 | 74,000.00 | |||||
| Total | 93,750.00 | 182,500.00 | 255,000.00 | 263,250.00 | 309,750.00 | 341,000.00 | 130,750.00 | 74,000.00 |
Receivables balance at the end of March = 50,000+50,750+58000 = $ 108,750.0
Receivables balance at the end of June = 66,000+64,750+74,000 = $ 204,750.0
1st quarter ADS = (75,000+125,000+145,000)/90 = $3,833.3
1st quarter DSO = Receivables at the end of March/Total Credit sales by end of March*90
= 108,750/345,000 X 90 = 41.4 days
2nd quarter ADS = (130,000+165,000+185,000)/90= $ 5,333.3
2nd quarter DSO = 204,750/480,000 X 90 = 38.4 days
jeff jeffy answered 4 months agoRelated Solutions
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Monitoring of Receivables. The Russ Fogler company, a small
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