Question

Dyl Pickle Inc. had credit sales of $4,000,000 last year and its days sales outstanding was DSO = 35 days. What was its average receivables balance, based on a 365-day year.
a. $441,096
b. $318,356
c. $383,562
d. $471,781
e. $368,219

Answer 1

Answer:

. $383,562

Explanation:

Days of sales outstanding (DSO) = Number of days in a period / Receivables turnover

Receivables turnover  = Revenue /Average receivables

$4,000,000 /Average receivables = Receivables turnover

35 = 365 / ($4,000,000 /Average receivables)

Average receivables = $383,561.64

Answer 2

Answer:

Option C

Average receivable balance=$383,562

Explanation:

While the the Days sales outstanding (DSO) is the average length if time it takes a business to collect the amount  owing from customers in respect of credit sales

Average receivable balance is the amount of credit sales which is left uncollected on the average at the end of accounting period.

The average receivable balance can be calculated as follows:

Average receive balance = DSO/365 × credit sales

Average receivable balance = 35/365 × 4,000,000 = 383,561.64  

Average receivable balance=$383,562