10. limecos income statement for the most recent year reported credit sales of $630,000 and cost of goods…
10. limecos income statement for the most recent year reported credit sales of $630,000 and cost of goods sold of $450,000. the average balance of its accounts receivable for that year was $90,000. limecos average days sales in receivables for the most recent year was closest to which of the following? select... 14 days 30 days 45 days 51 days
Answer
Explanation:
Step1: Recall the formula
The formula for average - days' sales in receivables is $\text{Average days' sales in receivables}=\frac{\text{Average accounts receivable}}{\text{Credit sales per day}}$, and $\text{Credit sales per day}=\frac{\text{Annual credit sales}}{365}$.
Step2: Calculate credit sales per day
Given annual credit sales = $$630,000$, then credit sales per day = $\frac{630000}{365}\approx$1726.03$.
Step3: Calculate average days' sales in receivables
Given average accounts receivable = $$90,000$, then average days' sales in receivables = $\frac{90000}{1726.03}\approx52.14$ days.
Answer:
51 days