Accounts Receivable Analysis The following data are taken from the financial sta

Question

Accounts Receivable Analysis The following data are taken from the financial statements of Mckee Technology Inc. Terms of all sales are 2/10, nVss 2016 2015 2014 Accounts receivable, end of year $171,400 179,000 $186,000 Net sales on account a. For 2015 and 2016, determine (1) the accounts receivable turnover and (2) the number of days' sales in receivables. Round answers to one decimal place. Assume a 365- day year. 1,243,920 1,168,000 2016 2015 1. Accounts receivable turnover 2. Number of days' sales in receivables b. The collection of accounts receivable has days days This can be seen in both the in accounts receivable turnover and the in the collection period. Previous Next All work saved. Submit Test for Grading

Explanation / Answer

a.

Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2

Accounts Receivable Turnover = Sales on account / Average Accounts Receivable

Number of day's sales in receivables = 365 / Accounts Receivable Turnover

b.

The collection of accounts receivable has Improved. This can be seen in both the Increase in accounts receivable turnover and the Decrease in collection period.

2016 2015 Average Accounts Receivable 175,200 [(171,400+179,000)/2] 182,500 [(179,000+186,000)/2]

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