A company has net sales on account of $1,750,000. Net accounts receivable at the beginning of the year are $147,000 and at the end of the year are $153,000. The days' sales in average receivables is:
A) 30.67.
B) 31.28.
C) 32.02.
D) 365.0.

Question

Quizplus · Accepted Answer

The days' sales in average receivables is calculated by dividing the average accounts receivable by the net sales on account and then multiplying by 365 days. Average accounts receivable is the sum of the beginning and ending accounts receivable divided by 2, which is ($147,000 + $153,000) / 2 = $150,000. Therefore, the calculation is ($150,000 / $1,750,000) * 365 = 31.28 days.

A Company Has Net Sales on Account of $1,750,000