Aging Schedule of Accounts Receivable - 1396 Words

ANSWERS TO QUESTIONS: 1. Table 1: Aging Schedule of Accounts Receivable AGE OF ACCOUNT | BALANCE OUTSTANDING | % OF TOTAL BALANCE OUTSTANDING | 0-15 days | $ 20,000 | 19.59 % | 16-30 days | 30,000 | 29.39 | 31-60 days | 40,000 | 39.19 | 61-90 days | 10,000 | 9.80 | Beyond 90 days | 2,071 | 2.03 | TOTAL | $ 102,071 | 100.0 % | 2. To evaluate the credit quality of Aero-Strip’s accounts receivables portfolio, we turn to their average collection period (ACP) and aging of accounts receivable. Knowing the ACP enables the firm to determine whether there is a general problem with the accounts receivable. The firm has credit terms of 2/10, net 30 so it would expect its ACP to equal about 30 days. Calculating the ACP of the†¦show more content†¦If Aero-Strip decides to sell its new invoices to a factor, the total financing available for 90 days is $ 35,200. CUSTOMER | AMOUNT | Ace Aviation, Inc.Express ShuttleLomax CharterMiller Aerial SurveyingPointers Aviation, Inc. | $ 7,290 18,554 2,497 13,121 8,532 | TOTAL | $ 50,000 | $ 50,000- ($50,000 x 80%)= $ 40,000 Less: reserve ($40,000 x 10%) 4,000 Commission ($40,000 x 2%) 800 TOTAL FINANCING $ 35,200 6. Effective Annual Rate=Total interest paid+Toal fees paidUsabel fundsÃâ€"36590 a. i=9%36590=2.22% Total interest paid=2.22% Ãâ€" $58,668.49=$ 1,301.96 EAR= $ 1,301.96$58,668.49Ãâ€" 36590=9% b. i= 8%36590=1.97% Total interest paid=1.97% Ãâ€"$35,200=$694.36 EAR= $ 694.36+$800$35,200Ãâ€"36590=17.22% The effective annual rate for pledging accounts receivable and factoring accounts receivable is 9% and 17.22%, respectively. 7. If I were to represent the commercial bank I would tell Howard that pledging his accounts receivable is better than factoring because there will be no transfer of the ownership of the accounts receivable and customer remittances will go directly to the company. In addition, hiring a credit manager would beShow MoreRelatedAnalysis Of Accounts Receivable Balances893 Words   |  4 PagesInterpretation of the Receivables Data Accounts receivable balances Accounts receivables balances are the uncollected amounts as at a specific point in time. For instance, for year one, first quarter at end of March, the balance is $ 386,875 and for the second quarter it is $ 333,000. For the second year, it is estimated that the balance as at end of March and June shall be $ 449,000 and $ 395,125 respectively. Average collection period (ACP) The average collection period is the average number ofRead MoreCase 27 - Finance1395 Words   |  6 PagesCase 27 1. For this question, ignore the forecasted receivables collection pattern in Exhibit 27.4. 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Signature______________________________Read MoreThe Reduction Of A / R Days862 Words   |  4 Pagesand correction of these issues will keep the doors of the facility open. The key players and activities that will commence are I. Accounting/Finance Department a. Differentiate current accounts receivable and classify them as current or unresolved b. Aging of Accounts Receivable Schedule Preparation c. Identify contributing factor of the average collection period that are within the controls of hospital management d. Assess current credit collection policies, standards, and