Homework Answers
Based on the information provided in the question, answers are as under:
1. Beerbo's beginning accounts receivable (A.R.) balance was $ 40,000
2. Beerbo's ending A.R. balance was $ 20,000
ending A.R. balance= (opening A.R. balance + Sales on account - Collections)
=40,000 + 360,000 - 380,000 = $ 20,000
3. Beerbo's average A.R. balance was $ 30,000
Average A.R. balance = ((opening A.R balance + closing A.R. balance) /2 )
=((40,000+ 20,000)/2) = $ 30,000
4. Beerbo's 2020 sales on account was $ 360,000
5. Beerbo's approximate 2020 A.R. turnover was 12
A.R. turnover = Net credit sales / Average A.R.
= $ 360,000 / 30,000 = 12
6. In 2020 it took Beerbo approximately how many days to collect its outstanding A.R. ?
days to collect outstanding A.R.= 365 / A.R. turnover ratio
= 365 / 12
= 30 days ( 30.42 days rounded to nearest day)
In 2020 it took Beerbo approximately 30 days to collect its outstanding A.R.
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