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


Related Solutions

Monitoring of Receivables. The Russ Fogler company, a small manufacturer of cordless telephones, began operations on...
Monitoring of Receivables. 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             $ 50,000 February           100,000 March               120,000 April                 105,000 May                 140,000 June                 160,000 Throughout this entire period, the firm’s credit customers maintained a constant payments pattern; 20% paid in the month of sale, 30% paid in the first month following the sale, and 50% paid...
Monitoring of Receivables The Russ Fogler Company, a small manufacturer of cordless telephones, began operations on...
Monitoring of Receivables 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 $  53,000 February 103,000 March 123,000 April 108,000 May 143,000 June 163,000 Throughout this entire period, the firm’s credit customers maintained a constant payments pattern: 10% paid in the month of sale, 50% paid in the first month following the sale, and 40% paid in the...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this year follows. Manufacturing costs Direct materials $ 35 per unit Direct labor $ 55 per unit Overhead costs Variable $ 40 per unit Fixed $ 6,300,000 (per year) Selling and administrative costs for the year Variable $ 750,000 Fixed $ 5,000,000 Production and sales for the year Units produced 105,000 units Units sold 75,000 units Sales price per unit $...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this year follows. Manufacturing costs Direct materials $ 35 per unit Direct labor $ 55 per unit Overhead costs Variable $ 40 per unit Fixed $ 6,600,000 (per year) Selling and administrative costs for the year Variable cost $ 775,000 Fixed cost $ 4,500,000 Production and sales for the year Units produced 110,000 units Units sold 80,000 units Sales price per...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this year follows. Manufacturing costs Direct materials $ 35 per unit Direct labor $ 55 per unit Overhead costs Variable $ 30 per unit Fixed $ 7,350,000 (per year) Selling and administrative costs for the year Variable $ 775,000 Fixed $ 5,000,000 Production and sales for the year Units produced 105,000 units Units sold 75,000 units Sales price per unit $...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this year follows. Manufacturing costs Direct materials $ 30 per unit Direct labor $ 50 per unit Overhead costs Variable $ 20 per unit Fixed $ 8,400,000 (per year) Selling and administrative costs for the year Variable $ 775,000 Fixed $ 5,000,000 Production and sales for the year Units produced 105,000 units Units sold 75,000 units Sales price per unit $...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this year follows. Manufacturing costs Direct materials $ 35 per unit Direct labor $ 55 per unit Overhead costs Variable $ 20 per unit Fixed $ 8,800,000 (per year) Selling and administrative costs for the year Variable $ 725,000 Fixed $ 4,500,000 Production and sales for the year Units produced 110,000 units Units sold 80,000 units Sales price per unit $...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this year follows. Manufacturing costs Direct materials $ 35 per unit Direct labor $ 55 per unit Overhead costs Variable $ 20 per unit Fixed $ 8,800,000 (per year) Selling and administrative costs for the year Variable $ 725,000 Fixed $ 4,500,000 Production and sales for the year Units produced 110,000 units Units sold 80,000 units Sales price per unit $...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2015. Its cost and...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2015. Its cost and sales information for this year follows.   Manufacturing costs      Direct materials $ 35   per unit      Direct labor $ 55   per unit      Overhead costs for the year          Variable overhead $ 4,200,000          Fixed overhead $ 6,300,000   Selling and administrative costs for the year      Variable $ 800,000      Fixed $ 4,500,000   Production and sales for the year      Units produced 105,000 units      Units sold 75,000 units      Sales price per unit...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this year follows. Manufacturing costs Direct materials $ 40 per unit Direct labor $ 60 per unit Overhead costs Variable $ 30 per unit Fixed $ 7,000,000 (per year) Selling and administrative costs for the year Variable $ 770,000 Fixed $ 4,250,000 Production and sales for the year Units produced 100,000 units Units sold 70,000 units Sales price per unit $...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT