Accounts Receivable Analysis The following data are taken from the financial sta

Question

Accounts Receivable Analysis The following data are taken from the financial statements of Mckee Technology Inc. Terms of all sales are 2/10, n/ss 2016 2015 2014 Accounts receivable, end of year Net sales on account a. For 2015 and 2016, determine (1) the accounts recelvable turnover and (2) the number of days sales in recelvables. Round answers to one decimal place. Assume a 365- 212,000 $226,000 $241,200 1,554,900 1,541,760 day year. 2016 2015 1. Accounts receivable turnover 2. Number of days' sales in receivables b. The collection of accounts rece va ie has in collection period days days p ved This can be seen in both the increase v n accounts receivable turnover and the dec ease··the a.1. Divide net sales by orage aocorts roonivabia Average A counts receivata. (Bagnnng Aceanis Redeeable , endang Acoun S Rece ible) 2 Divide aveage accounts receivable by average daly sales on account. Average Accounts reoeivabie (Beginning Accounts Receivable + Ending Accounts Receivabie)-2.Average sales on aocount Net Sales 365 days b Consider the relationship of the acounts involved. Consider the efects of he changes on the businens Leaming Otiective 2 Check My Work Previous Next

Explanation / Answer

= $1554900 / ($212000 + $226000)/2

= $1554900 / $219000

= 7.1 times

= $1541760 / ($226000 + $241200)/2

= $1541760 / $233600

= 6.6 times

= 365 / 7.1

= 51.41 days.

= 365 / 6.6

= 55.30 days.

Ratios 2016 2015 Accounts receivable turnover = credit sales / average accounts receivables

= $1554900 / ($212000 + $226000)/2

= $1554900 / $219000

= 7.1 times

= $1541760 / ($226000 + $241200)/2

= $1541760 / $233600

= 6.6 times

Number of days in sales receivables = 365 days / Accounts receivables turnover

= 365 / 7.1

= 51.41 days.

= 365 / 6.6

= 55.30 days.

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