Question

20Y9

2018
Sales
$8,375,000 $7,078,500
Accounts receivable:
Beginning of year
630,000 580,000
End of year
620,000 630,000
a. Determine the accounts receivable turnover for 2049 and 2048. Round answers to one decimal place.
2048:
20Y9:
b. Determine the days' sales in receivables for 2049 and 20Y8. Use 365 days and round all calculations to one decimal place.
20Y8:
days
2019:
days
c. Are the changes in the accounts receivable turnover and days' sales in receivables from 2018 to 2049 favorable or unfavorable?

Answer 1

20Y9 20Y8

a. Accounts receivable turnover = 13.4x 11.7x

b. Days' sales in receivable = 27.2 days 31.2 days

c. The changes in the accounts receivable turnover and days' sales in receivables from 20Y8 to 20Y9 are favorable.

Step-by-step explanation:

a) Data and Calculations:

20Y9 20Y8

Sales $8,375,000 $7,078,500

Accounts receivable:

Beginning of year 630,000 580,000 $1,210,000

End of year 620,000 630,000 $1,250,000

Average accounts

receivable = $625,000 $605,000

($1,250,000/2) ($1,210,000/2)

a. Accounts receivable turnover = Sales/Average accounts receivable

= 13.4x 11.7x

= ($8,375,000/$625,000) ($7,078,500/$605,000)

b. Days' sales in receivable = 365/Accounts receivable turnover

= 27.2 days 31.2 days

= (365/13.4) (365/11.7)

c. The changes in the accounts receivable turnover and days' sales in receivables from 20Y8 to 20Y9 are favorable.