Answer:
Trout Lumber Yard
a. The receivables turnover = Net Credit Sales/Average Receivables
= $8,105,305/$447,516
= 18 times per year
b. The Days' Sales in Receivables = Average Receivables/Credit Sales * 365
= $447,516/$8,105,305 * 365
= 20.15 days
c. On the average, it took 20.15 days (365/18.11) for credit customers to pay off their accounts during the past year.
Explanation:
a) Data and Calculations:
Accounts receivable balance = $447,516
Credit sales for the year just ended = $8,105,305
The receivables turnover = Net Credit Sales/Average Receivables
= $8,105,305/$447,516
= 18.11 times
The Days' Sales in Receivables = Average Receivables/Credit Sales * 365
= $447,516/$8,105,305 * 365
= 20.15 days
