Question

A company had net sales of $21,500 and ending accounts receivable of $2,700 for the current period. Its days' sales uncollected equals: (Use 365 days a year.) Multiple Choice 8.0 days. 58.9 days. 45.8 days. 7.4 days. 45.2 days.

Answer 1

45.8 days

Step-by-step explanation:

The computation of the days sales uncollected is shown below:

But before that first we need to find out the inventory turnover ratio which is

Inventory turnover ratio = Sales ÷ Accounts receivable

= $21,500 ÷ $2,700

= 7.96 times

Now Days sales uncollected is

= 365 ÷ Inventory turnover ratio

= 365 ÷ 7.96

= 45.8 days

We simply applied the above formulas