Question

The following information is taken from Reagan Company's December 31 balance sheet: Cash and cash equivalents $ 8,919 Accounts receivable 72,922 Merchandise inventories 62,862 Prepaid expenses 4,600 Accounts payable $ 15,450 Notes payable 89,138 Other current liabilities 10,000 If net credit sales for the current year were $609,000, the firm's days' sales uncollected for the year is: (Use 365 days a year.)

Answer 1

Answer:

44 days.

Explanation:

Days' sales uncollected = (Accounts receivable / Net credit sales) * 365 = ($72,922 / $609,000) * 365 = 44 days

This implies that that it takes Reagan Company 44 days before it collects its accounts receivable within the year.