Posted: November 30th, 2015

ROUTE CANAL SHIPPING COMPANY CASE

Route Canal Shipping Company has the following schedule for aging of accounts
receivable...Please see below for table
Required
a. Fill in column (4) for each month.
b. If the firm had $1,440,000 in credit sales over the four-month period, compute
the average collection period. Average daily sales should be based on a
120-day period.
c. If the firm likes to see its bills collected in 30 days, should it be satisfied with
the average collection period?
d. Disregarding your answer to part c and considering the aging schedule for
accounts receivable, should the company be satisfied?
e. What additional information does the aging schedule bring to the company
that the average collection period may not show?

Age of Receivables
30-Apr-07
1 2 3 4
Month of Sales Age of Account Amounts Percent of Amount Due
April 0-30 $105,000 _________
March 31-60 $60,000 _________
February 61-90 $90,000 _________
January 91-120 $45,000 _________

Total receivables $300,000 100%