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

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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