Question

Brief Exercise 13-11 The following data are taken from the financial statements of Cullumber Company. 2017 2016 Accounts receiva ble (net), end of year $564,600 $564,500 Net sales on account 4,018,000 4,898,000 Terms for all sales are 1/10, n/45 Compute for each year the accounts receivable turnover. At the end of 2015, accounts receivable was $516,500. (Round answers to 1 decimal place, e.g. 12.5.) 2017 2016 Accounts receivable turnover times times Compute for each year the average collection period. (Round answers to 1 decimal place, e.g. 12.5. Use 365 days for calculation.) 2017 2016 days Average collection period days

Answer 1

Average accounts receivable for 2016 = (516500+564500)/2 = 540500

Average accounts receivable for 2017 = (564600+564500)/2 = 564550

Accounts receivable turnover = Net credit sales/Average accounts receivable

Accounts receivable turnover:

For 2016 = 4018000/540500 = 7.4 times

For 2017 = 4898000/564550 = 8.7 times

Average collection period = 365/Accounts receivable turnover

For 2016 = 365/7.4 = 49.3 days

For 2017 = 365/8.7 = 41.95~ 42 days