24) The following information relates to Truman Unlimited for the past two years

Question

24) The following information relates to Truman Unlimited for the past two years Current vear Prior year Account Net sales (all credit) Cost of goods sold Gross profit Income from operations Interest expense Net income Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Total long-term assets Total current liabilities Total long-term liabilities Common stock, no par, 2,500 shares, market value $96 per share Retained earnings $219,000 $125,000 $94,000 $32,000 $2,000 $25,000 $25,000 $26,000 $65,000 $2,000 $118,000 $162,750 $60,000 $22,000 $180,000 $110,000 $70,000 $30,000 $7,000 $18,000 $17,000 $35,000 $60,000 $1,000 $113,000 $187,751 $90,000 $78,000 $40,000 $158,750 $40,000 $92,751 Days' sales in receivables for the current year is closest to A) 9.60 days B) 50.83 days C) 79.50 days D) 61.85 days

Explanation / Answer

Calculate Days's sales in receivable :

Average receivable = (26000+35000/2) = 30500

Days sales in receivable = Average receivable*365/credit sales

Days sales in receivable = 30500*365/219000 = 50.83 days

so answer is b) 50.83 days

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