20Y9 2018
Sales
$8,375,000 $7,078,500
Accounts receivable:
Beginning of year
630,000 580,000
End of year
620,000 630,000
a. Determine the accounts receivable turnover for 2049 and 2048. Round answers to one decimal place.
2048:
20Y9:
b. Determine the days' sales in receivables for 2049 and 20Y8. Use 365 days and round all calculations to one decimal place.
20Y8:
days
2019:
days
c. Are the changes in the accounts receivable turnover and days' sales in receivables from 2018 to 2049 favorable or unfavorable?

                                                           20Y9           20Y8

a. Accounts receivable turnover =    13.4x            11.7x

b. Days' sales in receivable =         27.2 days    31.2 days

c. The changes in the accounts receivable turnover and days' sales in receivables from 20Y8 to 20Y9 are favorable.

Explanation:

a) Data and Calculations:

                                     20Y9              20Y8

Sales                   $8,375,000  $7,078,500

Accounts receivable:

Beginning of year   630,000      580,000    $1,210,000

End of year             620,000      630,000    $1,250,000

Average accounts

receivable =       $625,000   $605,000

                   ($1,250,000/2)    ($1,210,000/2)

a. Accounts receivable turnover = Sales/Average accounts receivable

=                           13.4x            11.7x

= ($8,375,000/$625,000)     ($7,078,500/$605,000)

b. Days' sales in receivable = 365/Accounts receivable turnover

=                           27.2 days    31.2 days

=                          (365/13.4)    (365/11.7)

c. The changes in the accounts receivable turnover and days' sales in receivables from 20Y8 to 20Y9 are favorable.

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