American Bacon Inc. financial statements are presented in the table below. Based

Question

American Bacon Inc. financial statements are presented in the table below.

           Based on the information in the table, and using a 365-day year, calculate the average collection period (also called Days of Sales in Receivables or Number of Days of Credit).

Round the answers to two decimal places

Balance Sheet December 31, 2010

Cash and marketable securities $102,000 Accounts payable $287,000 Accounts receivable $299,000 Notes payable $61,200 Inventories $628,000 Accrued expenses $51,900 Prepaid expenses $10,300 Total current liabilities $400,100 Total current assets $1,039,300 Long-term debt $415,000 Gross fixed assets $1,502,000 Par value and paid-in-capital $376,000 Less: accumulated depreciation $312,000 Retained Earnings $1,038,200 Net fixed assets $1,190,000 Common Equity 1,414,200 Total assets $2,229,300 Total liabilities and owner

Explanation / Answer

Formula for Days of sales in receivables = 365 days/Debtors turnover ratio.

Formula for debtors turnover ratio = credit sales/Accounts receivables

Given credit sales =$6,387,700

and accounts receivables =$299,000

Debtors turnover ratio = $6,387,700/$299,000 =21.3635

Substituting in the Days of sales in receivables =365/21.3635

=17.08 days.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.