Ask Question
7 November, 01:39

Asset Management Ratios Corn Products, Corp. ended the year 2008 with an average collection period of 45 days. The firm's credit sales for 2008 were $9.5 million. What is the year-end 2008 balance in accounts receivable for Corn Products? (Consider a 365 days a year.)

+1
Answers (1)
  1. 7 November, 02:41
    0
    The ending balance of accounts receivable is 1,171,393

    Explanation:

    Given,

    Average collection period = 45 days

    Net credit sales = $9.5 million.

    We know,

    Accounts receivable turnover = Net Credit Sales/Average Accounts Receivable ... (i)

    Again, we know,

    Average collection period = 365 days/Accounts Receivable Turnover

    or, 45 days = 365 days/Accounts Receivable Turnover

    or, Accounts Receivable Turnover = (365/45) days

    or, Accounts Receivable Turnover = 8.11 times

    Putting the value of Accounts Receivable Turnover in equation (i),

    8.11 times = $9.5 million/Average Accounts Receivable

    Average Accounts Receivable = $9,500,000/8.11

    Therefore, Average Accounts Receivable = $1,171,393

    Since there is no beginning Accounts Receivable information, $1,171,393 is the year-end accounts receivable.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Asset Management Ratios Corn Products, Corp. ended the year 2008 with an average collection period of 45 days. The firm's credit sales for ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers