Question

i Requirements 1. 2. Compute Creative's days' sales in receivables for 2018. (Round to the nearest day.) Suppose Creative's normal credit terms for a sale on account are 2/10, net 30. How well does Creative's collection period compare to the company's credit terms? Is this good or bad for Creative? Print Done

Answer 1

Statement showing Computations
Particulars	Amount
Net receivables at beginning	49,100.00
Net receivables at ending	38,900.00
Average receivables = (49100 + 38900)/2	44,000.00
Net credit sales	580,800.00
Average accounts receivable turnover = 580,800/44000	13.20
Days sales in receivable = 365/13.20	28
2)
Company's collection period is good.
2/10 net 30 means if payment is made withing 10 days then 2% discount is given, otherwise payment should be made within 30 days.
In above case days sale in receivable is 28 days which is less than 30 days
Thus collection period is good