Question

Refer to the following selected financial information from McCormik, LLC. Compute the company's days' sales uncollected for Year 2. (Use 365 days a year.)

Year 2 Year 1
Cash $ 38,900 $ 33,650
Short-term investments 104,000 67,000
Accounts receivable, net 92,500 86,500
Merchandise inventory 128,000 132,000
Prepaid expenses 13,500 11,100
Plant assets 395,000 345,000
Accounts payable 106,400 114,800
Net sales 718,000 683,000
Cost of goods sold 397,000 382,000
Multiple Choice

45.4.

117.7.

52.9.

47.0.

85.0.

Answer 1

Answer:

47.0 days

Explanation:

According to the scenario, computation of the given data are as follow:-

Year 2 - Net sales = $718,000

Year 2 - Net accounts receivable = $92,500

We can calculate the Uncollected day sales of a company for 2 year by using following formula:-

Uncollected Day Sales of a Company for 2 Year = Accounts Receivable ÷ Net Sales × 365 days

= $92,500 ÷ $718,000 × 365

= 0.1288 × 365

= 47.012 days