Brief Exercise 8-11 (Part Level Submission) Suppose the 2017 financial statement

Question

Brief Exercise 8-11 (Part Level Submission) Suppose the 2017 financial statements of 3M Company report net sales of $22.8 billion. Accounts receivable (net) are $3.00 bilion at the beginning of the year and $3.08 bllion at the end of the year. (a) Collapse question part Your answer is correct. Compute 3M Company's receivable turnover. (Round answer to 1 decimal place, e.g. 12.5.) Accounts receivable turnover ratio 7.5 times SHOW LIST OF ACCOUNTS SHOW SOLUTION SHOW ANSWER LINK TO TEXT INTERACTIVE TUTORIAL Attempts: 2 of 3 used (b) Your answer is incorrect. Try again. Compute 3M Company's average collection period for accounts receivable in days. (Round answer to 1 decimal place, e.g.12.5. Use 365 days for calculation Average collection period days SHOW LIST OF ACCOUNTS LINK TO TEXT INTERACTIVE TUTORIAL Attempts: 2 of 3 used SAVE FOR LATER SUBMIT ANSW

Explanation / Answer

Receivable turnover ratio = sales/ average receivable

                                               = 22.8/[(3 + 3.08)/2]

                                                = 22.8/ 3.04

                                                = 7.5 times

Average collection period = Average accounts receivable ÷ (Annual sales ÷ 365 days)

                                                 = 3040000000/(22800000000/365)

                                                        = 3040000000/ 62465753.42465

                                                               = 48.6666 or 48.7 days

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