Question

Using the following end-of-year information, calculate the number of days' sales in receivables for Year 2.

Year 2: Sales are $82,500; average accounts receivable is $11,000.
Year 1: Sales are $78,000; average accounts receivable is $10,000.
a. 7.8
b. 7.5
c. 46.8
d. 48.7

Answer 1

The number of days' sales in receivables for Year 2 is 48.7

Step-by-step explanation:

The formula that is applicable to this scenario is the accounts receivable divided by sales multiplied by 365 days

The number of days' sales in receivables=$11,000/$82,500*365=48.67

The correct option is D, since the 48.67 was simply rounded down to one decimal place.