Question

The following data are taken from the financial statements of Sigmon Inc. Terms of all sales are 2/10, n/45. 20Y3 20Y2 20Y1 Accounts receivable, end of year $700,000 $645,000 $580,000 Sales on account 5,653,500 4,678,500 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet For 20Y2 and 20Y3, determine (1) the accounts receivable turnover and (2) the number of days' sales in receivables. Assume a 365-day year. Do not round intermediate calculations. Round your answers to one decimal place. 20Y3 20Y2 1. Accounts receivable turnover 2. Number of days' sales in receivables days days The collection of accounts receivable has . This can be seen in both the in accounts receivable turnover and the in the collection period.

Answer 1

Answer:

X2

AR TO 7.638367347

Days on Inventory 48

X3

Explanation:

$\frac{Sales}{Average AR} = Accounts Receivables Turnover$

​where:

$Average AR=(Beginning AR+ Ending AR)/2$

Sales 4,678,500

beginning 645,000

ending         580,000

$Average AR=645000 + 580000)/2$

Avg. AR = 612,500

$\frac{4678500}{612500} = Inventory Turnover$

AR TO 7.638367347

$\frac{365}{Inventory TO} = Days in receivables$

$\frac{365}{7.63836734693878} = Days in receivables$

Days on Inventory 48

X3

Sales      5,653,500

beginning 645,000

ending         700,000

$Average AR =645000 + 700000)/2$

Avg- AR =        672,500

$\frac{5653500}{672500} = Inventory Turnover$

AR TO 8.40669145

$\frac{365}{8.40669144981413} = Days in receivables$

Days on Inventory 43