Develop an accounts receivable (AR) trial balance (by customer and by invoice) as of December 31, 2015. Recall that beginning AR + sales – sales returns – cash receipts – bad debt write-offs = ending AR. As mentioned in Part I, the beginning accounts receivable balance is zero and there are no returns or write-offs in 2015.
Perform the following analyses relating to collectability risk (which is the risk the company won’t collect money for its sales) on the December 31, 2015, accounts receivable balance. For each procedure, provide a brief statement regarding your findings.
Display the year-to-date trend in sales and cash receipts by month for 2015 (with dollars on the x-axis and months on the y-axis). Use a visualization to best highlight any concerns about potential collection\
issues.
Compute the year-to-date days-sales-outstanding (DSO) ratio for each month. Show the results numerically and with a visualization. For the latter, use a column chart, also called a vertical bar chart (with DSO as the x-axis and months as the y-axis), to best highlight any concerns about potential collection issues.
DSO = ending AR balance for the period / total sales for the period (year-to-date)) * number of days in the period (year-to-date)
Develop an aging analysis by customer and invoice using 30-day increments (0–30 days, 31–60 days, 61–90 days and > 90 days). Display this at the customer level with the ability to drill down to the transaction (invoice) level. Provide a visualization of the percentage of accounts receivable in each aging category at the company level using a column chart (with percentage as the x-axis and aging category as the y-axis).