Question

Baxley Brothers has a DSO of 46 days, and its annual sales are $6,205,000. What is its accounts receivable balance? Assume that it uses a 365-day year. Round your answer to the nearest dollar.

Answer 1

$765,000

Step-by-step explanation:

The computation of the accounts receivable balance is shown below:

We know that

Days Sales Outstanding = (Accounts receivable ÷ Credit Sales) × Total number of days in a year

46 days = (Account receivable ÷ $6,205,000) × 365 days

So, the account receivable would be

= ($6,205,000 × 45 days) ÷ 365 days

= $765,000

We simply applied the above formula.