Question

Pujols Lumber Yard has a current accounts receivable balance of $365,061. Credit sales for the year just ended were $6,842,109. How long did it take on average for credit customers to pay off their accounts during the past year? (Enter the answer with 2 decimal places (e.g. 23.45)

Answer 1

Answer:

19.48 days

Explanation:

Calculation to determine How long did it take on average for credit customers to pay off their accounts during the past year

First step is to determine the receivables turnover for the company using this formula

Receivables turnover = Credit sales / Receivables

Let plug in the formula

Receivables turnover = $6,842,109 / $365,061

Receivables turnover = 18.74 times

Now let determine l the day’s sales in receivables using this formula

Days’ sales in receivables = 365 days / Receivables turnover

Let plug in the formula

Days’ sales in receivables = 365 days / 18.74

Days’ sales in receivables = 19.48 days

Therefore How long did it take on average for credit customers to pay off their accounts during the past year is 19.48 days