Question

Adair Corp. is concerned because the average time to collect its accounts receivable was 10 days longer than its normal credit terms of net 30. Adair reported the following in the Current Assets section of its comparative balance sheets:
12/31/17 12/31/16
Current Assets:
Accounts Receivable $123,300 $93,900
1. Assuming 360 days in a year, determine Adair's net credit sales for 2017?

Answer 1

Answer:

$1,109,700

Explanation:

The computation of the net credit sales is shown below:

Ending balance of account receivable = Net credit sales ÷ total number of days in a year × (credit days + average days)

$123,300 = Net credit sales ÷ 360 × (30 days + 10 days)

$123,300 = (Net credit sales ÷ 360 days) × 40 days

$123,300 × 360 days  ÷ 40 days = Net credit sales

So, the net credit sales would be

= $1,109,700