Question

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 Analysis The following data are taken from the financial statements of Sigmon Inc. Terms of all sales are 2/10, n/45. 20Y3 20Y2 20Y1 Accounts receivable, end of year Sales on account 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 $175,000 $190,000 $204,200 985,500 906,660 20Y3 20Y2 1. Accounts receivable turnover 2. Number of days' sales in receivables b. The collection of accounts receivable has collection period days days This can be seen in both the in accounts receivable turnover and the in the

Answer 1

Answer:-

Answer:-1)- Accounts receivable turnover ratio = Net credit sales/Average accounts receivable

20Y3= $985500/($190000+$175000/2)

          =$985500/190000 =5.18 Times

20Y2 =$906660/($204200+$190000/2)

         =$906660/$197100 =4.6 Times

2)-Number of days sales in reciviable = Average Account receivable / Net sales*365

                                                                       OR

                                                                365 days/ Accounts receivable turnover ratio

20Y3 =365 days/5.2 =70.2 days

20Y2 = 365 days/4.6 =79.3 days

Explanation:-

Particulars	20Y3	20Y2	Remark
Accounts receivable turnover ratio	5.2 times	4.6 times	Increase by	0.6 times
Number of days sales in receiviable	70.2 days	79.3 days	Decrease by	9.1 days