A company has net credit sales of $1,400,000, beginning net accounts receivable of $300,000, and ending net accounts receivable of $200,000. What is the days' sales in accounts receivable? (Use 365 days in calculations as needed. Round any intermediate calculations to two decimal places, and your final answer to the nearest whole day.)

Question

Alayna Pitts

Business

8 March, 00:42

A company has net credit sales of $1,400,000, beginning net accounts receivable of $300,000, and ending net accounts receivable of $200,000. What is the days' sales in accounts receivable? (Use 365 days in calculations as needed. Round any intermediate calculations to two decimal places, and your final answer to the nearest whole day.)

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Chum · Answer 1

Turnover: 5.60 times

Days sales in accounts receivables: 65 Days.

Explanation:

Calculation of Days Sales in Accounts Receivable = 365 / Turnover

Turnover = Sales / Average balance of trade receivables*

Average balance of trade receivables = (Closing Balance + Opening Balance) / 2.

Turnover: 1,400,000 / { (200,000 + 300,000) / 2} = 5.60 times

Days sales in accounts receivables: 365 / 5.6 = 65 days