Question

the following data exists for Carley Company. 2018 2017 Accounts Receivable $50,000 $70,000 Net Sales 500,000...

the following data exists for Carley Company.

2018 2017
Accounts Receivable $50,000 $70,000
Net Sales 500,000 410,000


Calculate the accounts receivable turnover and the average collection period for accounts receivable in days for 2018. (Use 365 days for calculation. Round answers to 1 decimal place, e.g. 15.2.)

Accounts receivable turnover times
Average collection period days

  

Homework Answers

Answer #1

Accounts Receivables Turnover Ratio (times) = Net Credit Sales / Average Accounts Receivables

Average Accounts Receivables = (Opening Accounts Receivables + Closing Accounts Receivables )/ 2

= ( $ 70,000 + $ 50,000) /2

= $ 60,000

Accounts Receivables Turnover Ratio (times) = $ 500,000 / $ 60,000

= 8.33 times

Average Collection Period = Days in a period( assuming 365 days) / Accounts receivables turnover ratio

= 365 / 8.33

= 43.81 or 44 days

therefore,

Accounts Receivables Turnover Ratio 8.33 times
Average Collection Period 44 days
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