Accounts receivable management An evaluation of the books of Blair Supply, which follows, gives the end-of-year accounts receivable balance, which is believed to consist of amounts originating in the months indicated. The company had annual sales of $2.4 million. The firm extends 30-day credit terms.

a. Use the year-end total to evaluate the firm’s collection system.

b. If 70% of the firm’s sales occur between July and December, would this information affect the validity of your conclusion in part a? Explain.

Month of origin                      Accounts receivable

July                                         $ 3,875

August                                       2,000

September                                 34,025

October                                     15,100

November                                   52,000

December                                 193,000

Year-end accounts receivable      $300,000