Alpha Company has the following account balances information for fiscal year 201
ID: 2523997 • Letter: A
Question
Alpha Company has the following account balances information for fiscal year 2015 & 2016 (all balances are normal):
Alpha Company
December 31
Accounts
2016
2015
Accounts Receivable
$42,500
$36,000
Merchandise Inventory
57,000
50,000
Office Supplies
25,000
20,000
Credit Sales
980,000
740,000
Interest Income
25,000
20,000
Cost of Goods Sold
460,000
385,000
1. What is the FY 2016 accounts receivable turnover ratio? Enter the answer as a number rounded to one decimal place followed by a space and the word times. (Example 1.123 would be entered 1.1 times)
2. What is the FY 2016 days outstanding for accounts receivable ratio? Enter the answer as a number rounded to one decimal place followed by a space and the word days. (Example 1.123 would be entered 1.1 days)
Explanation / Answer
Answer for 1)
Accounts receivable ratio:
Credit sales/average accounts receivables
=$980000/($(42500/36000)/2)
=25 times
Answer for 2)
Days outstanding for accounts receivables ratio:
No. Of days/accounts receivables ratio
=365days/25times=14.6 days
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