Question

At December 31, 2016, Flint Corporation Imports reported this information on its balance sheet.

Accounts receivable		$560,400
Less: Allowance for doubtful accounts		37,640

During 2017, the company had the following transactions related to receivables.

1.		Sales on account		$2,968,300
2.		Sales returns and allowances		92,202
3.		Collections of accounts receivable		2,518,800
4.		Write-offs of accounts receivable deemed uncollectible		43,310
5.		Recovery of bad debts previously written off as uncollectible		15,840

Compute the accounts receivable turnover. (Round answer to 1 decimal place, e.g. 12.5.)

Accounts receivable turnover

Type your answer here

times

Compute the average collection period. (Round answer to 1 decimal place, e.g. 12.5.)

Average collection period

Type your answer here

days

Answer 1

Net credit sales = 2968300 - 92202 = $2876098

Net accounts receivable balance for 2017 = (560,400-37640)+2876098 - 2,518,800 - 43,310 = $836748

Accounts receivable turnover = Net credit sales / Average accounts receivables

= $2876098 / ((560,400-37640)+836748}/2

= 4.2 times

Average collection period = 365 / 4.2 = 86.9 days