Question

1) The JED Manufacturing Inc. has the following sales and account receivables balances for the first quarter. Assume 30-day months. What is the DSO for the manufacturing company (rounded up to a whole number)?

	Credit Sales	Uncollected Sales
January	$100,000	$10,000
February	125,000	15,000
March	150,000	25,000
April	175,000	60,000

a) 15 days b) 18 days c) 21 days d) 24 days e) 30 days

2) Trade credit terms of 1.5/10 net 45 are offered. What is the annualized cost of missing the trade credit discount?

a) 24.83% b) 22.58% c) 21.28% d)18.53% e) 15.88%

3) Credit terms of 5/7, net 30 implies that if payments are made in ______ days a cash discount of _______% may be taken.

a) 7, 5 b) 5, 7 c) 5, 30 d) 7, 30 e) 15, 45

4) Use Table 1. What is the Payment Index (roundedup to a whole number)?

	Credit Sales	Uncollected Amount
January	$100,000	$10,000
February	125,000	15,000
March	150,000	25,000
April	175,000	60,000

a) 127% b) 80% c) 73% d) 64% e) 52%

Answer 1