At the end of 2018, accounts receivable amounted to $163,000. At the beginning of the year...

At the end of 2018, accounts receivable amounted to $163,000. At the beginning of the year it was $242,000. Net credit sales for the year amounted to $720,000 and net income was calculated to be $197,000.

Determine the days sales outstanding ratio and the accounts receivable turnover ratio.

Do not enter dollar signs or commas in the input boxes.
Round your answer to 2 decimal places.

Days Sales Outstanding = Answer days
Accounts Receivable Turnover = Answer times

Solutions

Expert Solution

Solution

Days Sales Outstanding =102.53 days or 101.12 days
Accounts Receivable Turnover = 3.56 Times

Working

Accounts receivables Turnover ratio
	Net Credit Sales	/	Average receivable	=	Accounts receivables Turnover ratio
	$ 720,000.00	/	$ 202,500.00	=	3.56	Times

Average collection period
	Days in a year	/	Accounts receivables Turnover ratio	=	Average collection period
	365	/	3.56	=	102.53	Days

Beginning balance	$ 242,000.00
Ending balance	$ 163,000.00
Total	$ 405,000.00
Average Receivables	$ 202,500.00

ekkarill92 answered 1 year ago

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