The following data are taken from the financial statements of Crane Company. 201
ID: 2545159 • Letter: T
Question
The following data are taken from the financial statements of Crane Company.
2017
2016
1)Compute for each year the accounts receivable turnover. At the end of 2015, accounts receivable was $511,500. (Round answers to 1 decimal place, e.g. 12.5.)
2) Compute for each year the average collection period. (Round answers to 1 decimal place, e.g. 12.5. Use 365 days for calculation.)
2017
2016
Accounts receivable (net), end of year $ 571,600 $ 615,000 Net sales on account 4,565,000 4,057,000 Terms for all sales are 1/10, n/45Explanation / Answer
(1) The receivables turnover = Net credit sales / Average net AR*
2017: Receivables turnover = 4,565,000/593300 = 7.7 times
2016: Receivables turnover = 4,057,000/563250 = 7.2 times
*Average net AR = (Beginning AR + Ending AR)/2
2017 = ( 571600 + 615000) / 2 = 593300
2016 = ( 615000 + 511500) / 2 = 563250
(2) The average collection period = 365 days/Receivables turnover
2017: Average collection period = 365/7.7 = 47.4 days
2016: Average collection period = 365/7.2 = 50.7 days
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.