Tomlin Ltd's average accounts receivable for year ended 31 December 2012 was $200 000.The number of days in receivables was 146 days.What were the credit sales for the year?
A) $500 000
B) $300 000
C) $80 000
D) this cannot be determined from the information provided.

Question

Quizplus · Accepted Answer

The number of days in receivables is calculated as (Average Accounts Receivable / Credit Sales) * 365. Rearranging this formula to find Credit Sales gives Credit Sales = (Average Accounts Receivable / Number of Days in Receivables) * 365. Plugging in the values: Credit Sales = ($200,000 / 146) * 365 = $500,000.

Tomlin Ltd's Average Accounts Receivable for Year Ended 31 December