The following data are taken from the financial statements of Fleetwood Company.

Question

The following data are taken from the financial statements of Fleetwood Company. 2012 2011 Accounts receivable (net) , end of the year $560,000 $540,000 Net sales on account 4,400,000 4,000,000 Terms for all sales are 1/10, n/45 Compute for each year (a) the receivables turnover ratio and (b) the average collection period. At the end of 2010, accounts receivable was $500,000. (Round all answers to 3 decimal places, e.g. 12.215.) Receivables turnover ratio: 2012 2011 .. Average collection period: 2012 2011

Explanation / Answer

Year 2011

Receivables turnover = Net credit sales/Average net receivables

=4,000,000/{(540000 + 500000)/2}

=7.692

Average collection period= 365/Receivables turnover = 365 /7.692 = 47.45

Year 2012

Receivables turnover = Net credit sales/Average net receivables

=4,400,000/{(560000 + 540000)/2}

=8.00

Average collection period= 366/Receivables turnover = 366 /8 = 45.75

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