Show LMe How Print item as Polo Purple Label, Classic, Polo Jeans Co, and Chaps.
ID: 2543939 • Letter: S
Question
Show LMe How Print item as Polo Purple Label, Classic, Polo Jeans Co, and Chaps. Polo Classic reported the following for two recent years Year 2 Year 1 $6,654,315 686,200 $6,752,500 664,300 Assume that accounts receivable were $605,900 at the beginning of Year 1 Year 2: Year 1: b. Compute the days' sales in receivables for Year 2 and Year 1. Round to one decimal place. Use 365 days per year in your Year 2:das c. The change in the accounts receivable turnover from year i to year 2 indicates a(n) the emoency of colecting accounts receivable and is a(n) change. The change in the days' sales in receivables is a(n)Explanation / Answer
Answer a.
Year 1:
Average Accounts Receivable = ($605,900 + $686,200) / 2
Average Accounts Receivable = $646,050
Accounts Receivable Turnover = Sales / Average Accounts Receivable
Accounts Receivable Turnover = $6,654,315 / $646,050
Accounts Receivable Turnover = 10.3 times
Year 2:
Average Accounts Receivable = ($686,200 + $664,300) / 2
Average Accounts Receivable = $675,250
Accounts Receivable Turnover = Sales / Average Accounts Receivable
Accounts Receivable Turnover = $6,752,500 / $675,250
Accounts Receivable Turnover = 10.0 times
Answer b.
Year 1:
Days’ sales in receivable = 365 / Accounts Receivable Turnover
Days’ sales in receivable = 365 / 10.3
Days’ sales in receivable = 35.4 days
Year 2:
Days’ sales in receivable = 365 / Accounts Receivable Turnover
Days’ sales in receivable = 365 / 10.0
Days’ sales in receivable = 36.5 days
Answer c.
The change in the accounts receivable turnover from year 1 to year 2 indicated an decrease in the efficiency of collecting accounting receivable and is a negative change. The change in the days’ sales in receivable is a negative change.