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17 January, 13:14

The following information is taken from Reagan Company's December 31 balance sheet: Cash and cash equivalents $ 9,219 Accounts receivable 74,422 Merchandise inventories 64,362 Prepaid expenses 4,900 Accounts payable $ 15,750 Notes payable 90,638 Other current liabilities 10,300 If net sales for the current year were $607,500, the firm's days' sales uncollected for the year is: (Use 365 days a year.)

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  1. 17 January, 13:36
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    The correct answer is 44.73 days or 45 days.

    Explanation:

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

    We can calculate the day's sales uncollected by using following formula:

    Day's sales uncollected = No. of days in year : Debtor turnover ratio

    Where, Debtor turnover ratio = Sales : Accounts receivable

    = $607,500 : $74,422

    = 8.16

    So, by putting the value, we get

    Day's sales uncollected = 365 days : 8.16

    = 44.73 days or 45 days.
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