Accounts Receivable Analysis
The following data are taken from the financial statements of Sigmon Inc. Terms of all sales are 2/10, n/45.
|Accounts receivable, end of year||$135,400||$142,000||$150,000|
|Sales on account||901,550||861,400|
a. For 20Y2 and 20Y3, determine (1) the accounts receivable turnover and (2) the number of days' sales in receivables. Round answers to one decimal place. Assume a 365-day year.
|1. Accounts receivable turnover|
|2. Number of days' sales in receivables||days||days|
b. The collection of accounts receivable has . This can be seen in both the in accounts receivable turnover and the in the collection period.
|1. Accounts receivable turnover||6.5||5.9|
|2. Number of days' sales in receivables||56.2||61.9|
|The collection of accounts receivable has improved . This can be seen in both the increase in accounts receivable turnover and the decrease in the collection period.|
|Sales on account||901550||861400|
|Divide by Average Accounts receivable||138700||146000|
|Accounts receivable turnover||6.5||5.9|
|Days in a year||365||365|
|Divide by Accounts receivable turnover||6.5||5.9|
|Number of days' sales in receivables||56.2||61.9|
Get Answers For Free
Most questions answered within 1 hours.