A general contractor has $45,000 in outstanding invoices that are 30 days past due and $23,000 in invoices that are 60 days past due. What is the total amount in accounts receivable that requires immediate collection attention?
Correct Answer
C) $68,000
Both 30-day and 60-day past due invoices require immediate collection attention. The total is $45,000 + $23,000 = $68,000.
Why This Is the Correct Answer
When managing accounts receivable, any invoice that is past due requires immediate collection attention, regardless of whether it's 30 days or 60 days overdue. Both categories represent money that should have already been collected and is negatively impacting cash flow. The total amount requiring immediate attention is the sum of all past due invoices: $45,000 + $23,000 = $68,000. This represents the contractor's total exposure to potential bad debt and cash flow problems.
Why the Other Options Are Wrong
Option A: $23,000
This option only includes the 60-day past due amount ($23,000) but ignores the 30-day past due invoices, which also require immediate collection attention.
Option B: $22,000
This option only includes the 30-day past due amount ($45,000) but ignores the 60-day past due invoices, which also require immediate collection attention.
Option D: $45,000
This amount ($22,000) doesn't correspond to any logical calculation from the given figures and appears to be a distractor.
Memory Technique
Think 'Past Due = Pursue' - any invoice past due needs immediate pursuit for collection, so add ALL past due amounts together.
Reference Hint
Business and Finance chapter covering accounts receivable management and cash flow analysis
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