Final answer:
To calculate the number of days' sales in accounts receivable, we first find the average accounts receivable for the year, then the daily credit sales, and divide the former by the latter. The calculation gives us 25 days as the number of days' sales in accounts receivable for the current year.
Step-by-step explanation:
To calculate the number of days' sales in accounts receivable based on the provided data, we first need to figure out the average accounts receivable for the year and the average daily credit sales.
The average accounts receivable is calculated by taking the sum of the accounts receivable at the beginning and the end of the year and dividing by two:
Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2
Average Accounts Receivable = ($45,000 + $35,000) / 2
Average Accounts Receivable = $40,000
Next, we need to determine the daily credit sales by dividing the net sales on account during the year by the number of days in the year:
Daily Credit Sales = Net Sales on Account / Days in the Year
Assuming 365 days in a year, Daily Credit Sales = $584,000 / 365
Daily Credit Sales = $1,600.00 (rounded to two decimal places)
Finally, the number of days' sales in accounts receivable is found by dividing the average accounts receivable by the daily credit sales:
Number of Days' Sales in Accounts Receivable = Average Accounts Receivable / Daily Credit Sales
Number of Days' Sales in Accounts Receivable = $40,000 / $1,600.00
Number of Days' Sales in Accounts Receivable = 25 days
Therefore, the number of days' sales in accounts receivable is 25 days.