Question

Quasar, Inc. sells clothing, accessories, and personal care products for men and women through its retail stores. Quasar reported the following data for two recent years:

	Year 2		Year 1
Sales	$4,095,300		$4,190,565
Accounts receivable	317,550		302,950

Assume that accounts receivable were $346,750 at the beginning of Year 1.

a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place.

Year 2:
Year 1:

b. Compute the days' sales in receivables for Year 2 and Year 1. Round interim calculations and final answers to one decimal place. Use 365 days per year in your calculations.

Year 2:	days
Year 1:	days

Answer 1

Answer:-Year 1:-

a)-Accounts receivable turnover ratio = Net credit sales/Average accounts receivable

= $4095300/($346750+$317550/2)

=$4095300/$332150 =12.3 times

b)- Average collection period =365 days/ Accounts receivable turnover ratio

=365 days/12.3 times =29.7 days

Year2:-

a)-Accounts receivable turnover ratio = Net credit sales/Average accounts receivable

= $4190565/($317550+$302950/2)

=$4190565/$310250 =13.5 times

b)- Average collection period =365 days/ Accounts receivable turnover ratio

=365 days/13.5 times =27.0 days