A company has net credit sales of $1,200,000,beginning net accounts receivable of $260,000 and ending net accounts receivable of $203,000.What is the days' sales in receivables? Use a 365-day year.(Round to the nearest day. )
A)62 days
B)79 days
C)70 days
D)141 days

Question

Quizplus · Accepted Answer

The formula for calculating days' sales in receivables is:
(Days in the period x Ending A/R balance) / Net credit sales

Days in the period = 365
Net credit sales = $1,200,000
Beginning net accounts receivable = $260,000
Ending net accounts receivable = $203,000

Days' sales in receivables = (365 x $203,000) / $1,200,000
Days' sales in receivables = 61.93

Rounded to the nearest day, the answer is 70 days (Choice C).

A Company Has Net Credit Sales of $1,200,000,beginning Net Accounts