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Accounts Receivable Analysis The following data are taken from the financial statements of Sigmon Inc. Terms of all sales are

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Answer #1

Answer:

20Y3 20Y2
Accounts Receivable Turnover 6.2 times 5.6 times
Number of days sales in receivables 58.9 days 65.2 days

Explanation:

1)

Accounts Receivable Turnover Ratio=

Net Credit Sales ÷ ( Average Accounts Receivable)

20Y3 = $1,040,980 ÷ [ ($163,800 + $172,000) ÷ 2 ]

= $1,040,980 ÷ $167,900

= 6.2 times

20Y2 = $981,120 ÷ [($172,000 + $178,400) ÷ 2 ]

= $981,120 ÷ 175200

= 5.6 times

2)

Number of days sale in receivables =

365 days ÷ Accounts Receivable Turnover Ratio

20Y3 = 365 days ÷ 6.2 times

= 58.9 days (approx.)

20Y4 = 365 days ÷ 5.6 times

= 65.2 days (approx.)

​​​​​​

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