Your ﬁrm deals strictly with four customers. The average amount that each customer pays per month along with the collection delay associated with each payment is shown below. Given this
Information, what is the amount of the average daily receipts?
Assume that every month has 30 days.

Question

Quizplus · Accepted Answer

To calculate the average daily receipts, we need to first find the total amount received from all four customers in a month, and then divide it by the number of days in a month to get the average daily receipts.

Total amount received per month:
Customer 1: $1,000, collected after 60 days
Customer 2: $1,500, collected after 30 days
Customer 3: $2,000, collected after 90 days
Customer 4: $2,500, collected after 45 days

To calculate the total amount received per month, we need to account for the collection delay. This means that the amounts received in a month would be the payments received for the current month's sales, plus the payments received for the sales made in the previous months (after the collection delay).

For Customer 1:
Amount received in a month = $1,000 (current month) + $0 (previous month - not yet collected) = $1,000

For Customer 2:
Amount received in a month = $1,500 (current month) + $1,500 (previous month - collected after 30 days) = $3,000

For Customer 3:
Amount received in a month = $2,000 (current month) + $0 (previous month - not yet collected) = $2,000

For Customer 4:
Amount received in a month = $2,500 (current month) + $0 (previous month - not yet collected) = $2,500

Total amount received per month = $1,000 + $3,000 + $2,000 + $2,500 = $8,500

Average daily receipts = Total amount received per month / Number of days in a month

= $8,500 / 30 = $283.33 (rounded to the nearest cent)

However, we need to remember that the options provided are rounded to the nearest dollar. So, to get the closest option, we need to round up the average daily receipts to the nearest dollar, which gives us:

Average daily receipts = $284 (rounded to the nearest dollar)

The option closest to $284 is B) $666.67 (rounded to the nearest dollar), which is the best choice.

Your ﬁRm Deals Strictly with Four Customers