Question

A company reports the following: Sales $4,560,000 Average accounts receivable (net) 380,000 Determine (a) the accounts receivable turnover and (b) the number of days' sales in receivables. Round interim calculations to the nearest dollar and final answers to one decimal place. Assume a 365-day year. a. Accounts receivable turnover b. Number of days' sales in receivables days

Answer 1

Answer:

a. 12 times

b. 30.42 days

Explanation:

Data provided in the question

Sales = $4,560,000

Average account receivable = $380,000

So, The computation is shown below:

a. Account receivable turnover ratio is

= Sales ÷ average account receivable (net)

= $4,560,000 ÷ $380,000

= 12 times

b. Now the number of days sales in receivable is

= Total number of days in a year ÷ account receivable turnover ratio

= 365 days ÷ 12 times

= 30.42 days