6-2

Q1. What data do you need to calculate the account balances?

The needed data would be the sales order and the cash received in order to know how much the
total order is and how much money should still be paid.

Q2. What is the formula needed to compute the balance in accounts payable?

The formula needed and used to compute the balance of accounts payable would be subtracting
the amount of cash received from the Sales Order.

Q3. How would you compute and group the age of each receivable?

In the excel file, the range of the ages were grouped by the following ages: 0-30, 31-60, 61-90,
and >90. This way, we would know how long each receivable has been outstanding.

Q4.What are the primary and foreign keys that relate the two tables in this workbook?

The primary keys in use during the whole process were Receipt_ID, Customer_ID, and Sales
order_ID while the foreign keys that related them were Cash Receipt Date, Receipt Amount, Sales Order,
and Age.

Q5. Of the not yet collected balances in each of the four buckets, which bucket is least likely to be
collected? Which bucket is most likely to be collected? How would this help us come up with an
allowance for doubtful accounts?

Among the receivables in the data, those with the age outstanding of greater than 90 days
would be the least likely to be collected since they have not been paid for over 3 months. The bucket
that is most likely to be collected would be with the outstanding age of 0-30 days since it should still be
within the terms agreed upon by the buyer and the seller. This would help with constructing an
allowance for doubtful accounts by basing its likeliness of being collected on its age outstanding. The
receivables that have been outstanding for too long, with time, would be held candidate as a doubtful
account thus creating an allowance for doubtful accounts.

Q6. Based on what you have viewed with the September data, what do you expect to find as far as
outstanding balances now that the year has finished at the end of December?

The outstanding balances are expected to have been lessened by payment with the assumption
that there are no additional receivables since September. Although it also depends on the terms
between the buyer and the seller on how long the buyer has before they must pay their due receivables,
it is expected that most of the receivables would have been paid by December, although with the
hesitance of the same assumption on the receivables that have been outstanding for over 90 days
according to the data.