Question

Question 28 - Part 2 Never Answered

Richard & James is a multination corporation that manufactures and markets many household products. Last year, sales for the company were $77,000(all amounts in million). The annual report did not disclose the amount of credit sales, so we will assume that 80% of sales were on credit. The average gross profit sales was 50 percent. Additional account balance were.

                                                     Ending                                       Beginning

Account receivable (net)              $6,700                                       $5,900

Inventory                                      6,822                                         6.305

How many days does it take for the company to collect its account receivable and sell its inventory? (Use 365 day in a year. Round your answers to 2 decimal places.)

                                                            Days

                                             To collect accounts receivable       { ? }

                                             To sell inventory                                 { ? }

Answer 1

Answer with working is given below

a) Average Collection period 365 days Accounts receivable turnover over 365 9.78 350 37.33 37.33 Days Days Accounts receivable turnover Credit Sales Average Accounts Receivable $61,600 $6,300 9.78 b) Average Inventory days 365 days Inventory turnover ratio 365 62.23 Days 5.87 Inventory turnover ratio Cost of Goods sold Average inventory | $38,500 5.87 5.877 I $6,564 Working note Accounts Receivable Inventory Ending $6,700 $6,822 Beginning Average $5,900 $6,300 $6,305 $6,564 Sales Credit Sales % Credit Sales $77,000 80% $61,600 Gross Profit % Cost of goods sold 50% $38,500