Question

The following information is taken from Reagan Company's December 31 balance sheet: Cash and cash equivalents $ 9,619 Accounts receivable 76,422 Merchandise inventories 66,362 Prepaid expenses 5,300 Accounts payable $ 16,150 Notes payable 92,638 Other current liabilities 10,700 If net sales for the current year were $605,500, the firm's days' sales uncollected for the year is:

Answer 1

Answer:

46.07 days

Explanation:

Calculation for the firm's days' sales uncollected for the year

Using this formula

Days' Sales Uncollected Ratio = Ending Accounts Receivable/Net Sales * 365

Let plug in the formula

Days' Sales Uncollected Ratio = ($76,422/$605,500) * 365

Days' Sales Uncollected Ratio = 46.067 days

Days' Sales Uncollected Ratio = 46.07 days Approximately

Therefore the firm's days' sales uncollected for the year is: 46.07 days