Please answer: Refer to the following selected financial information from McCorm
ID: 2416583 • Letter: P
Question
Please answer:
Refer to the following selected financial information from McCormik, LLC. Compute the company's days' sales uncollected for Year 2.
Year 2
Year 1
Cash
$37,500
36,850
Short-term investments
90,000
90,000
Accounts receivable, net
85,500
86,250
Merchandise inventory
121,000
117,000
Prepaid expenses
12,100
13,500
Plant assets
388,000
392,000
Accounts payable
113,400
111,750
Net sales
711,000
706,000
Cost of goods sold
390,000
385,500
Year 2
Year 1
Cash
$37,500
36,850
Short-term investments
90,000
90,000
Accounts receivable, net
85,500
86,250
Merchandise inventory
121,000
117,000
Prepaid expenses
12,100
13,500
Plant assets
388,000
392,000
Accounts payable
113,400
111,750
Net sales
711,000
706,000
Cost of goods sold
390,000
385,500
Explanation / Answer
Company's days sales uncollectable for year 2
Days sales uncollectible = Accounts Receivable/Net sales x365
= 85500/711000x365 = 43.89 days