Question

Southeast Jewelers Inc. sells only on credit. Its days sales outstanding is 73 days, and its average accounts receivable balance is $500,000. What are its sales for the year? Assume a 365-day year.

Answer 1

$2,500,000

Step-by-step explanation:

The computation of the sales amount is shown below:

= Average account receivable balance × total number of days in a year ÷ days sales outstanding

= $500,000 × 365 days ÷ 73 days

= $2,500,000

We simply apply the unitary method for this question that is shown above in the calculation part i.e multiplying the total number of days in a year by the average account receivable balance and then divided it by the days sales outstanding