50,000Question 3 (20 points) Alpha Company has the following account balances in
ID: 2414150 • Letter: 5
Question
50,000Question 3 (20 points)
Alpha Company has the following account balances information for fiscal year 2015 & 2016 (all balances are normal):
Alpha Company December 31
Accounts
Accounts Receivable
2016 2015
$50,000 $45,000
Merchandise Inventory
2016 2015
57,000 50,000
Office Supplies
2016 2015
25,000 20,000
Credit Sales
2016 2015
1,000,000 740,000
Interest Income
2016 2015
25,000 20,000
Cost of Goods Sold
2016 2015
460,000 385,000
1. What is the FY 2016 accounts receivable turnover ratio? Enter the answer as a number rounded to one decimal place followed by a space and the word times. (Example 1.123 would be entered 1.1 times)
2. What is the FY 2016 days outstanding for accounts receivable ratio? Enter the answer as a number rounded to one decimal place followed by a space and the word days. (Example 1.123 would be entered 1.1 days)
Explanation / Answer
Answer:-
l)- Accounts receivable turnover ratio (FY 2016) = Net credit sales/Average accounts receivable
=$1000000/($50000+$45000/2 )
=$1000000/$47500 =21.1 times
2)-Average collection period (FY 2016)=Days*Account receivable/Credit sales
=365 *{($50000+45000)/2}/$1000000
=365*($47500/$1000000) =17.3 days
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