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georiím.com vcamp pder ault.aspx ? 165&t; abid-1 57#/unit/8/Complete / Section ID Question #1 H SaveAssignment Subrmitted 7 EX 14-9 Accounts receivable analysis Objective 3 g data are taken from the financial statements of Sigmon Inc. Terms of all sales are 2/10, n/45. 20Y1 20Y3 20Y2 Accounts receivable, end of year $600,000 s725,000 $ 650,000 Sales on account 5,637,500 4,687,500 and 20Y3, determine (1) the accounts receivable turnover and (2) the number of days' sales in receivables. (Round to the nearest dollar and one decimal place) B. t conclusions can be drawn from these data conceming accounts receivable and credit policies? +Upload File No files uploaded for this question.Explanation / Answer
Answer A.
20Y2:
Average Accounts Receivable = ($650,000 + $600,000) / 2
Average Accounts Receivable = $625,000
Accounts Receivable Turnover = Sales on Account / Average Accounts Receivable
Accounts Receivable Turnover = $4,687,500 / $625,000
Accounts Receivable Turnover = 7.5 times
Number of days’ sales in receivable = 365 / Accounts Receivable Turnover
Number of days’ sales in receivable = 365 / 7.5
Number of days’ sales in receivable = 48.7 days
20Y3:
Average Accounts Receivable = ($725,000 + $650,000) / 2
Average Accounts Receivable = $687,500
Accounts Receivable Turnover = Sales on Account / Average Accounts Receivable
Accounts Receivable Turnover = $5,637,500 / $687,500
Accounts Receivable Turnover = 8.2 times
Number of days’ sales in receivable = 365 / Accounts Receivable Turnover
Number of days’ sales in receivable = 365 / 8.2
Number of days’ sales in receivable = 44.5 days
Answer B.
Company is become more efficient in collection of debt which shows that they have strengthen their credit policies.
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