Question

A company has net credit sales of​ $94,000, beginning net accounts receivable of​ $22,000 and ending net accounts receivable of​ $18,000. Calculate the​ days' sales in receivables.​ (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest whole​ day.)

Answer 1

The​ days' sales in receivables are 78 days.​

Step-by-step explanation:

Days Sales Receivable is also know as Days receivables. It is an method of estimation of a company for the receivables value. it measure the numbers of days at average account receivable take after sales to convert into cash.

Formula for Days Sales Receivable is as follow

Days Sales Receivable = (Average Account receivable / Credit Sales) x 365

Average Account receivable = (Beginning account receivable + Ending account receivables) / 2

Average Account receivable = ($22,000 + $18,000) / 2 = $20,000

net Credit sales = $94,000

Placing Value in the formula

Days Sales Receivable = ($20,000 / $94,000) x 365 = 77.66 days