Question

A company with net credit sales of $1,440,000, beginning net receivables of $110,000, and ending net...

A company with net credit sales of $1,440,000, beginning net receivables of $110,000, and ending net receivables of $130,000 has days' sales outstanding of A. 41 days B. 31 days C. 37 days D. 34 days and how did you get that?

Homework Answers

Answer #1

The correct answer is Option B. 31 days

Sales days outstanding = 365 days÷ accounts receivables turnover ratio

Accounts receivable turnover ratio = net credit sales ÷ average accounts receivable

Average accounts receivable =( beginning accounts receivables + ending accounts receivable ) ÷ 2

So. Average accounts receivable = ( $110000+$130000)÷2= average accounts receivable = $120000

Accounts receivable turnover ratio = $14,40000÷ $120000

Accounts receivable turnover ratio = 12 times

Sales days outstanding = 365 days ÷ 12 times = 30 .42 days or rounded to 31 days . Days can not be in friction so 30.42 days will be considered as whole next day.so 30.42 days rounded to 31 days

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