Question

Lenox Company has the following financial data: 2020 2019 Assets Current Assets: Cash and Cash Equivalents $ 2,000 $ 1,900 Accounts Receivable 2,800 1,600 Merchandise Inventory 1,200 1,000 Prepaid Expenses 1,300 2,100 Total Current Assets 7,300 6,600 Other Assets 16,000 15,000 Total Assets $ 23,300 $21,600 Liabilities Current Liabilities $ 7,000 $ 8,000 Long-term Liabilities 4,000 3,500 Total Liabilities 11,000 11,500 Stockholders’ Equity Common Stock, no par $ 6,500 $ 4,300 Retained Earnings 5,800 5,800 Total Stockholders’ Equity 12,300 10,100 Total Liabilities and Stockholders’ Equity $ 23,300 $ 21,600 2020 Net Sales $ 40,000 Cost of Goods Sold 9,000 Gross Profit 31,000 Operating Expenses 16,000 Operating Income 15,000 Interest Expense 300 Income Before Income Taxes 14,700 Income Tax Expense 2,400 Net Income $ 12,300 What is Lenox Company’s days sales in receivable?

Answer 1

Answer:

25.55 days

Explanation:

Days Sales in Receivable = Accounts Receivable ÷ (Sales / 365)

therefore

2020 = $2,800 ÷ ($ 40,000 / 365) = 25.55 days