Question

Senath Company’s annual report reveals net credit sales of $240,000 and average accounts receivable of $20,000. The report also shows an average inventory balance of $10,000 and cost of goods of $200,000. Based on this information, the number of days to collect accounts receivable is (treat any partial day as a whole day)

Answer 1

Answer:

number of days to collect accounts receivable is 31

Explanation:

given data

net credit sales = $240,000

average accounts receivable = $20,000

average inventory balance = $10,000

cost of goods = $200,000

to find out

number of days to collect accounts receivable is

solution

we get here first Accounts receivable turnover that is here

Accounts receivable turnover = $\frac{240000}{20000}$

Accounts receivable turnover =  12

and

Average number of days to collect receivable is here as

Average number of days to collect = $\frac{365}{12}$

Average number of days to collect  = 31

so number of days to collect accounts receivable is 31