Question

Asset Management Ratios Mr. Husker’s Tuxedos Corp. ended the year 2015 with an average collection period of 32 days. The firm’s total sales for 2015 were $56.1 million. What is the year-end 2015 balance in accounts receivable for Mr. Husker’s Tuxedos?

Answer 1

To calculate Mr. Husker's Tuxedos year-end 2015 balance in accounts receivable, we can use the average collection period and the total sales for 2015. The average collection period is the average number of days it takes to collect payment from customers. We can calculate the year-end balance in accounts receivable by multiplying the average daily sales by the average collection period.

Step-by-step explanation:

To calculate the year-end 2015 balance in accounts receivable for Mr. Husker’s Tuxedos, we can use the average collection period and the total sales for 2015. The average collection period is the average number of days it takes to collect payment from customers. We can use this ratio to estimate the accounts receivable balance.

To calculate the average daily sales, we divide the total sales by the number of days in a year. Then, we multiply the average daily sales by the average collection period to calculate the year-end balance in accounts receivable.

In this case, the average collection period is 32 days and the total sales for 2015 are $56.1 million. Let's calculate the year-end 2015 balance in accounts receivable:

Average daily sales = Total sales / Number of days in a year = $56,100,000 / 365 = $153,698.63

Year-end balance in accounts receivable = Average daily sales × Average collection period = $153,698.63 × 32 = $4,911,156.16

Answer 2

$4,918,356

Step-by-step explanation:

We know that

Average collection period in days = (Account receivable ÷ credit sales) × total number of days in a year

32 days = (Accounts receivable ÷ $56.1 million) × 365 days

So, the accounts receivable would be

= (32 days × $56,100,000) ÷ 365 days

= $4,918,356

Simply we apply the average collection period formula so that the accurate amount can come.