Ordonez Lumber Yard has a current accounts receivable balance of $444,516. Credi
ID: 2814026 • Letter: O
Question
Ordonez Lumber Yard has a current accounts receivable balance of $444,516. Credit sales for the year just ended were $8,053,510. What is the receivables turnover? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Receivables turnover 18.12 times What is the days’ sales in receivables? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Days’ sales in receivables 20.14 days How long did it take on average for credit customers to pay off their accounts during the past year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Average collection period days
Explanation / Answer
Answer:
Receivables Turnover = Sales / Accounts Receivable
Receivable Turnover = $8,053,510 / $444,516
Receivable Turnover = 18.12 times
Days’ Sales in Receivable = 365days / Receivable Turnover
Days’ Sales in Receivable = 365 / 18.12
Days’ Sales in Receivable = 20.14 days
Average collection days, is same as the day’s sales in receivables, was 20.14 days
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