Question

The following information is taken from Reagan Company's December 31 balance sheet:

Cash and cash equivalents $10,019​
Accounts receivable 78,422
​Merchandise inventories 68,362
​Prepaid expenses 5700
​Accounts payable $16,550
​Notes payable 94,638
​Other current liabilities 11,100
​If net sales for the current year were $603,500, the firm's days' sales uncollected for the year is:________. (Use 365 days a year.)
A. 159.4 days
B. 79.7 days
C. 41.3 days
D. 47.4 days
E. 69.5 days

Answer 1

Answer:the firm's days' sales uncollected for the year= 47.4 days---d

Step-by-step explanation:

The Days’ Sales Uncollected, a liquidity ratio that gives an idea of average collection period which is an estimation for the number of days the amount receivables is expected to be collected.

it depends on the 1) Account receivables and 2) Net sales .

the formulae is given below as

Days sales uncollectible = Account receivables / Net Sales x 365

=( $78,422/$603,500) x 365 =0.12994 x 365= 47.4 days