Question

Based on the following data for the current year, what is the number of days' sales in receivables (rounded to one decimal place)? Assume 365 days a year. Sales on account during year $546,849 Cost of goods sold during year 202,703 Accounts receivable, beginning of year 49,712 Accounts receivable, end of year 49,559 Inventory, beginning of year 87,452 Inventory, end of year 111,027

Answer 1

Answer:

The answer is 33.1 days

Explanation:

The number of days' sales in receivables is the number of days it takes a company to convert its credit sales for customers into cash.

The number of days' sales in receivables = (average accounts receivable ÷ total credit sales) x 365 days.

Average accounts receivable =

($49,712 + $49,559) ÷ 2

=$49,635.5

Credit sales = $546,849

Therefore we have,

($49,635.5 ÷ $546,849 ) x 365days

33.1 days.