Exercise 9-14 Kerwick Company had accounts receivable of $199,600 on January 1,

Question

Exercise 9-14 Kerwick Company had accounts receivable of $199,600 on January 1, 2017. The only transactions that affected accounts receivable during 2017 were net credit sales of $1,502,600, cash collections of $1,422,000, and accounts written off of $30,000 Compute the ending balance of accounts receivable. Ending balance of accounts receivables Compute the accounts receivable turnover for 2017. (Round answer to 2 decimal places, ..2.50.) Accounts receivable turnover Compute the average collection period in days. (Round answer to 1 decimal place, e.g.2.5. Use 365 days for calculations.) Average collection period days

Explanation / Answer

a) Ending balance of account receivable = (199600+1502600-1422000-30000) = 250200

b) Account receivable turnover = Net credit sales/average receivables

Average receivables = (250200+199600/2) = 224900

Account receivable turnover = 1502600/224900 = 6.68 Times

c) Average collection period = 365/account receivable turnover

= 365/6.68

Average collection period = 54.6 days

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