13 8 The following data are taken from the financial statements of Sigmon Inc. T

Question

13 8 The following data are taken from the financial statements of Sigmon Inc. Terms of all sales are 2/10, n/45. 20Y2 $127,800 $135,000 $142,400 693,500 20Y1 Sales on account 748,980 a. For 20Y2 and 20Y3, determine (1) the accounts receivable turnover and (2) the number of days sales in receivables. Round answers to one decimal place. Assume a 365-day year 20Y3 1. Accounts receivable turnover 2. Number of days' sales in receivables 20Y2 a 1. Divide net sales by average accounts receivable. Average Accounts receivable (Beginning Accounts Rocevable Ending Accounts Rocevable) 2 a2. Dide average accounts recevable by average daly yes on account Average Accounts recevable- Begnning Accourts Recevable b. Consider the relationship of the accounts involved Consider the effects of the changes on the business (Beginning Accounts Receivable Enrg Accounts Recenatie) . 2 Amae ay saes on acce

Explanation / Answer

a. 1 Accounts receivable turnover=Net sales/Average accounts receivable 20Y3 20Y2 a. Sales on account 748980 693500 b. Beginning accounts receivable 135000 142400 c. Ending accounts receivable 127800 135000 d. Average accounts receivable [(b)+©]/2 131400 138700 e. Accounts receivable turnover 5.7 5 2 Number of days sales in receivables=Average accounts receivable/Average daily sales on account 20Y3 20Y2 a. Average accounts receivable 131400 138700 b. Sales on account 748980 693500 c.Average daily Sales on account (b/365) 2052 1900 d. Number of days sales in receivables (a/c) 64.04 73.00 days days

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