Net sales total $912,500. Beginning and ending accounts receivable are $73,000 and $ 67,000...

Question:

Net sales total $912,500. Beginning and ending accounts receivable are $73,000 and $ 67,000 respectively. Calculate days' sales in receivables.

a. 25 Days

b. 28 Days

c. 27 Days

d. 34 Days

What Is The Days' In Sales Receivables:

The Days' In Sales Receivables is a financial metric that can be calculated using the income statement and balance sheet. The Days' In Sales Receivables tells users of the financial statements the amount of time it takes to collect the average account receivable.

Answer and Explanation:

Accounts receivable turnover (ART) = Net sales / Average receivables

=912,500 / ((73,000 +67,000 )/2)

=13.04 times

Days' sales in receivables = 365 / ART

=365 / 13.04

=28.0 days (rounded)

The answer is thus B.


Learn more about this topic:

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Credit Policy & Receivables

from Finance 101: Principles of Finance

Chapter 19 / Lesson 1
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