Accounts Receivable Analysis The following data are taken from the financial sta
ID: 2583321 • Letter: A
Question
Accounts Receivable Analysis The following data are taken from the financial statements of McKee Technology Inc. Terms of all sales are 2/10, n/55 2016 2015 2014 Accounts receivable, end of year Net sales on account a. For 2015 and 2016, 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. $163,800 $172,000 $178,400 1,175,300 1,138,800 2016 2015 1. Accounts receivable turnover 2. Number of days' sales in receivables b. The collection of accounts receivable has and the days days This can be seen in both the in accounts receivable turnover in the collection period.Explanation / Answer
a 1 Acounts receivable turnover: 2016 7 =1175300/((163800+172000)/2) 2015 6.5 =1138800/((172000+178400)/2) 2 Number of days' sales in receivables 2016 52.1 =365/7 2015 56.2 =365/6.5 b The collection of accounts receivable has improved. This can be seen in both the increase in accounts receivable turnover and the decrease in the collection period.