The following data is extracted from the financial records of AU Tiles. The data is in relation to the financial year ending 30 June 2020 and 30 June 2021. 30 June 2020 30 June 2021 $ $ Cash at bank 17,050 20,150 Inventories 1,013,700 1,171,800 Accounts receivable 740,000 755,000 Bills receivable 13,175 15,190 Bad debts written off during the year 9,610 - Sales revenue for the year 2,821,000 4,030,000 Discount allowed 4,960 4,340
The following data is extracted from the financial records of AU Tiles. The data is in relation to the financial year ending 30 June 2020 and 30 June 2021.
|
|
30 June 2020 |
30 June 2021 |
|
|
$ |
$ |
|
Cash at bank |
17,050 |
20,150 |
|
Inventories |
1,013,700 |
1,171,800 |
|
|
740,000 |
755,000 |
|
Bills receivable |
13,175 |
15,190 |
|
|
9,610 |
- |
|
Sales revenue for the year |
2,821,000 |
4,030,000 |
|
Discount allowed |
4,960 |
4,340 |
The business uses the Income Statement method to estimate its’ doubtful debts each year. It has been estimated that 1% of the sales revenue of the year will be the bad debts expense for the year. At the beginning of the financial year of 2020 (1 July 2019), the Allowance for Doubtful Debts account has a credit balance of $19,000.
Calculate the receivable turnover ratio for year 2021 and comment on the ratio
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