Faldo Corp sells on terms that allow customers 45 days to pay for merchandise.Its sales last year were $325,000,and its year-end receivables were $60,000.If its DSO is less than the 45-day credit period,then customers are paying on time.Otherwise,they are paying late.By how much are customers paying early or late? Base your answer on this equation: DSO − Credit Period = Days early or late,and use a 365-day year when calculating the DSO.A positive answer indicates late payments,while a negative answer indicates early payments.
A)21.27
B)22.38
C)23.50
D)24.68
E)25.91

Question

Quizplus · Accepted Answer

The Days Sales Outstanding (DSO) is calculated as (Receivables / Sales) * 365 = ($60,000 / $325,000) * 365 = 67.38 days. The difference between the DSO and the credit period is 67.38 - 45 = 22.38 days, indicating customers are paying 22.38 days late.

Faldo Corp Sells on Terms That Allow Customers 45 Days