Accounts Receivable Analysis The following data are taken from the financial sta

Question

Accounts Receivable Analysis The following data are taken from the financial statements of Sigmon Inc. Terms of all sales are 2/10, n/45. 20Y3 202 20Y1 Accounts receivable, end of year $204,400 $219,000 $233,600 Sales on account a. For 20Y2 and 20Y3, determine (1) the accounts receivable turnover and (2) the number of days' sales in receivables. Round answers to one decimal place. Assume a 365-day year. 1,460,730 1,425,690 20Y3 20Y2 1. Accounts receivable turnover 2. Number of days' sales in receivables b. The collection of accounts receivable has days days . This can be seen in both the in the collection period in accounts receivable turnover and the improved deteriorated

Explanation / Answer

1 Accounts Receivable turnover: 20Y3 6.9 =1460730/((204400+219000)/2) 20Y2 6.3 =1425690/((219000+233600)/2) Number of days' sales in receivables: 20Y3 52.9 =365/6.9 20Y2 57.9 =365/6.3 b The collection of accounts receivable has improved. This can be seen both increase in accounts receivable turnover and decrease in collection period

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