Question

# In 2020, Nash Company has net credit sales of \$1,030,000 for the year. It had a...

In 2020, Nash Company has net credit sales of \$1,030,000 for the year. It had a beginning accounts receivable (net) balance of \$100,000 and an ending accounts receivable (net) balance of \$106,000.

Compute Nash Company’s accounts receivable turnover. (Round answer to 1 decimal place, e.g. 2.5.)

 Accounts receivable turnover times

Compute Nash Company’s average collection period in days. (Round answer to 1 decimal place, e.g. 2.5. Use 365 days for calculations.)

 Average collection period days

Sales = \$1,030,000

Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2
Average Accounts Receivable = (\$100,000 + \$106,000) / 2
Average Accounts Receivable = \$103,000

Accounts Receivable Turnover = Sales / Average Accounts Receivable
Accounts Receivable Turnover = \$1,030,000 / \$103,000
Accounts Receivable Turnover = 10 times

Average Collection Period = 365 days / Accounts Receivable Turnover
Average Collection Period = 365 / 10
Average Collection Period = 36.5 days