Financial Training Systems (FTS) bills its accounts on terms of 3/10, net 30. The firm’s accounts receivable include $100,000 that has been outstanding for 10 or fewer days, $300,000 outstanding for 11 to 30 days, $100,000 outstanding for 31 to 40 days, $20,000 outstanding for 41 to 50 days,

Question

Financial Training Systems (FTS) bills its accounts on terms of 3/10, net 30. The firm’s accounts receivable include $100,000 that has been outstanding for 10 or fewer days, $300,000 outstanding for 11 to 30 days, $100,000 outstanding for 31 to 40 days, $20,000 outstanding for 41 to 50 days, $10,000 outstanding for 51 to 60 days, and $2000 outstanding for more than 60 days. Prepare an aging schedule for FTS.

Accepted Answer

PLAN
An aging schedule shows the amount and percent of total accounts receivable outstanding for different lengths outstanding. With the available information, we can calculate the aging schedule based on dollar amounts outstanding. (The numbers don’t add to exactly 100% because of rounding.)

EXECUTE

EVALUATE
FTS does not have an excessive percent outstanding at the iong-end of the table (only 6% of their accounts receivable are more than 40 days outstanding).

Question 19.5: Financial Training Systems (FTS) bills its accounts on terms...

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