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Harper Corp.'s sales last year were $425,000, and its year-end receivables were $42,500. Harper sells on...

Harper Corp.'s sales last year were $425,000, and its year-end receivables were $42,500. Harper sells on terms that call for customers to pay 30 days after the purchase, but many 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.
Answers: a.

6.50
b.

8.37
c.

9.27
d.

8.81
e.

9.74

Solutions

Expert Solution

Answer is a. 6.50

Days Sales outstanding =365/(Sales/Account Receivable)

=365/(425000/42500)

Days Sales outstanding=36.50 Days

how many days late do customers pay=DSO -Allowed credit period =36.50 Days-30 Days=6.50 Days

jeff jeffy answered 2 years ago
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