The following information is to be used to answer question below:
| Discount percentage | 4% | |
| Days of credit w/o being late | 40 | |
| Discount period | 15 | |
| Days nondiscount customers take to pay | 61 | |
| Annual sales | $1,000,000 | |
| % of customers who take the discount | 30% | |
| % of customers who don’t take the discount | 70% | |
| % cost per period | 4.17% | |
| Number of periods per year, assuming customers pay on time | 14.600 | |
| Number of periods per year, assuming customers pay late | 7.935 |
Crowder Co. sells on terms of 4/15, net 40. Total sales for the year are $1,000,000. 30% of the customers pay on the 5th day and take discounts; the other 70% pay, on average, 61 days after their purchases, so they pay late. Assume a 365 day year for this problem, and also assume that both sales and accounts receivable are recorded net of discounts, regardless of whether or not customers take discounts.
Assuming that Crowder’s sales are constant from year to year and also during each year, how much accounts receivable does the company have? Assume that both annual sales and accounts receivable are based on net sales, regardless of whether or not all customers take discounts.
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