Answer:
20Y9 20Y8
a. Accounts receivable turnover = 13.4x 11.7x
b. Days' sales in receivable = 27.2 days 31.2 days
c. The changes in the accounts receivable turnover and days' sales in receivables from 20Y8 to 20Y9 are favorable.
Explanation:
a) Data and Calculations:
20Y9 20Y8
Sales $8,375,000 $7,078,500
Accounts receivable:
Beginning of year 630,000 580,000 $1,210,000
End of year 620,000 630,000 $1,250,000
Average accounts
receivable = $625,000 $605,000
($1,250,000/2) ($1,210,000/2)
a. Accounts receivable turnover = Sales/Average accounts receivable
= 13.4x 11.7x
= ($8,375,000/$625,000) ($7,078,500/$605,000)
b. Days' sales in receivable = 365/Accounts receivable turnover
= 27.2 days 31.2 days
= (365/13.4) (365/11.7)
c. The changes in the accounts receivable turnover and days' sales in receivables from 20Y8 to 20Y9 are favorable.
