Question

Accounts receivable Effective credit management involves establishing credit standards for extending credit to customers, determining the company’s terms of credit, and setting up procedures for invoicing and collecting past-due accounts. The following statement refers to a credit management policy. Select the best term to complete the sentence. The minimum financial strength a customer must have to be granted credit is indicated by the company’s terms, collection, or credit? Consider the case of Tun Ash Inc.: Tun Ash Inc. has a very attractive credit policy, and none of its customers pays in cash when the firm makes a sale. Tun Ash Inc. sells to its customers on credit terms of 2/10, net 30. If a customer bought $200,000 worth of goods and paid the firm cash eight days after the sale, how much cash would Tun Ash Inc. get from the customer? (Note: Round your answer to the nearest whole dollar.) $196,000 $200,000 $170,000 $180,000 If the customer paid off the account after 15 days, Tun Ash Inc. would receive . (Note: Round your answer to the nearest whole dollar.) Approximately 20% of Tun Ash Inc.’s customers take advantage of the discount and pay on the 10th day. The remaining 80% take an average of 35 days to pay off their accounts. What is Tun Ash Inc.’s days sales outstanding (DSO), or the average collection period? (Note: Do not round intermediate calculations. Round your answer to one decimal place.) 30.0 days 24.0 days 28.5 days 27.0 days?

Answer 1

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