Han Corp's sales last year were $315,000, and its year-end receivables were $52,500. The firm sells...

Han Corp's sales last year were $315,000, and its year-end receivables were $52,500. The firm sells on terms that call for customers to pay 30 days after the purchase, but some 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. Assume all sales to be on credit. Do not round your intermediate calculations.

a.	37.31
b.	30.83
c.	23.43
d.	24.36
e.	29.60

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Expert Solution

Account Receivables Turnover Ratio = Sales / average Account Receivables

= $315000/52500

=6 times

Account Receivables Turnover ratio

Average Collection Period = 365/ Account Receivables turnover ratio

= 365 days /6

=60.83 days

Late pay = 60.83 - 30
=30.83 days

Correct Option : b.30.83

jeff jeffy answered 1 year ago

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