Accounts Recelvabie Turnover and Days Sales in Receivabies Quasar, Inc. reported

Question

Accounts Recelvabie Turnover and Days Sales in Receivabies Quasar, Inc. reported the following: Year 2 Year 1 Sales Accounts receivable Assume that accounts receivable were $197,100 at the beginning of Year 1 a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place. Year 2: Year 1: b. Compute the days' sales in receivables for Year 2 and Year 1. Round interim calculations and final answers to one decimal place. Use 365 days per year in your calculations Year 2: Year 1: $1,921,360 $1,952,750 175,200 167,900 days days

Explanation / Answer

a. Accounts receivable turnover = Sales / Average accounts receivable

Year 2:

Accounts receivable turnover = $1,921,360 / [($175,200 + $167,900) / 2] = 11.2

Year 1:

Accounts receivable turnover = $1,952,750 / [($197,100 + $167,900) / 2] = 10.7

b. Days' sales in receivables = 365 / Accounts receivable turnover

Year 2:

Days' sales in receivables = 365 / 11.2 = 32.6 days

Year 1:

Days' sales in receivables = 365 / 10.7 = 34.1 days

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