Question Accounts Receivable Analysis The following data are taken from the financial statements of Krawcheck Inc. Terms of all sales are 2/10, n/55. a. For 2015 and 2016, determine (1) the accounts receivable turnover and (2) the number of days' sales in receivables. Round interim calculations to the nearest dollar and final answers to one decimal place. Assume a 365-day year. b. The collection of accounts receivable has improved . This can be seen in both the increase in accounts receivable turnover and the decrease in the collection period. 2016 2015 2014 Accounts receivable, end of year $500,000 $475,000 $440,000 Net sales on account 3,412,500 2,836,500
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question
Accounts Receivable Analysis
The following data are taken from the financial statements of Krawcheck Inc. Terms of all sales are 2/10, n/55.
a. For 2015 and 2016, determine (1) the accounts receivable turnover and (2) the number of days' sales in receivables. Round interim calculations to the nearest dollar and final answers to one decimal place. Assume a 365-day year.
b. The collection of accounts receivable has improved . This can be seen in both the increase in accounts receivable turnover and the decrease in the collection period.
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2016 |
2015 |
2014 |
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Accounts receivable, end of year |
$500,000 |
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$475,000 |
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$440,000 |
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Net sales on account |
3,412,500 |
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2,836,500 |
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