Question

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Simon Company’s year-end balance sheets follow.

At December 31	2017			2016			2015
Assets
Cash	$	33,443		$	39,092		$	41,136
Accounts receivable, net		89,200			62,600			55,400
Merchandise inventory		115,000			85,000			56,000
Prepaid expenses		10,770			10,262			4,571
Plant assets, net		329,991			301,670			266,893
Total assets	$	578,404		$	498,624		$	424,000
Liabilities and Equity
Accounts payable	$	141,142		$	82,582		$	54,849
Long-term notes payable secured by mortgages on plant assets		106,565			112,390			91,830
Common stock, $10 par value		162,500			162,500			162,500
Retained earnings		168,197			141,152			114,821
Total liabilities and equity	$	578,404		$	498,624		$	424,000

The company’s income statements for the years ended December 31, 2017 and 2016, follow. Assume that all sales are on credit:

For Year Ended December 31	2017						2016
Sales				$	751,925					$	593,363
Cost of goods sold	$	458,674					$	385,686
Other operating expenses		233,097						150,121
Interest expense		12,783						13,647
Income taxes		9,775						8,900
Total costs and expenses					714,329						558,354
Net income				$	37,596					$	35,009
Earnings per share				$	2.31					$	2.15

(1) Compute days' sales uncollected.

Answer 1

Solution assuming 365 days in a year

	Days' sales uncollected
2016	36.29 or 36.3 days
2017	36.84 or 36.9

Alternate solution assuming 360 days in a year

	Days' sales uncollected
2016	35.80 or 35.8 days
2017	36.34 or 36.3 days

Working

	Days' sales uncollected
	Numerator	/	denominator	=	Days' sales uncollected
	(Average Accounts receivable	/	Credit Sales) x 365	=	Days' sales uncollected
2016	$        59,000.00	/	593363) x 365	=	35.80	days
2017	$        75,900.00		751925) x 365		36.34	days

If still answers do not match that maybe because of round off so leave a comment with roundoff information.

	2016	2017
Beginning receivable	$       55,400.00	$      62,600.00
Ending receivable	$       62,600.00	$      89,200.00
Total	$     118,000.00	$   151,800.00
Divided by 2	2	2
Average receivable	$       59,000.00	$      75,900.00