Question

Based on the following data for the current year, what is the number of days' sales in receivables (rounded to one decimal place)? Assume 365 days a year.

Sales on account during year	$419,853
Cost of goods sold during year	195,537
Accounts receivable, beginning of year	48,016
Accounts receivable, end of year	52,503
Inventory, beginning of year	91,781
Inventory, end of year	108,736

Answer 1

• Days sales in Accounts receivables tells the no. of days the sales remain unpaid.
• Firstly, Accounts receivables turnover is to be calculated, then

365 days is to be divided by the ratio calculated.

A	Accounts receivable, beginning of year	$          48,016.00
B	Accounts receivable, end of year	$          52,503.00
C = A+B	Total	$        100,519.00
D = C/2	Average Accounts receivables	$          50,259.50
E	Sales on account during year	$        419,853.00
F = E/D	Account receivables turnover ratio	8.35 times
G = 365 days / F	No. of days sales in receivables	43.7 days = Answer

Answer = 43.7 days