Question

Barga Company's net sales for Year 1 and Year 2 are $660,000 and $748,000, respectively. Its year-end balances of accounts receivable follow: Year 1, $64,000; and Year 2, $93,000. a. Complete the below table to calculate the days' sales uncollected at the end of each year. b. Did days’ sales uncollected improve or worsen in Year 2 versus Year 1?

Answer 1

The days' sales uncollected at the end of Year 1 was 35.15 days, while at the end of Year 2 it was 45.64 days.

Step-by-step explanation:

To calculate the days' sales uncollected at the end of each year, we need to divide the year-end balances of accounts receivable by the net sales and multiply by 365.

For Year 1: $64,000 / $660,000 * 365 = 35.15 days

For Year 2: $93,000 / $748,000 * 365 = 45.64 days

The days' sales uncollected worsened in Year 2 compared to Year 1, as the number of days increased from 35.15 to 45.64.