Consider the following information: Cash Sales $59,000 Credit Sales 510,000 Begi
ID: 2456527 • Letter: C
Question
Consider the following information:
Cash Sales $59,000
Credit Sales 510,000
Beginning Cash 18,000
Ending Cash 11,500
Beginning Retained Earnings 32,300
Ending Retained Earnings 41,700
Beginning Accounts Receivable 40,000
Ending Accounts Receivable 50,000
Net Income 64,000
Assuming a 365-day year, determine the days to collect accounts receivable
a. 304.2 days
b. 125.0 days
c. 31.9 days
d. 32.22 days
e. 28.4 days
Explanation / Answer
d. 32.22 days Beginning Accounts Receivable 40,000.00 Ending Accounts Receivable 50,000.00 Average Acc Receivable = (40,000+50,000)/2 45,000.00 Credit Sales 510,000.00 Debtor Turnover Ratio= Net Credit Sales/ Avg AR Debtor Turnover Ratio= 510,000/45,000 Debtor Turnover Ratio= 11.33 Days to collect AR = 365/11.33 Days to collect AR = 32.22
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