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17 December, 12:36

The following data exists for Carley Company. 20182017 Accounts Receivable$50,000$70,000 Net Sales500,000410,000 Calculate the accounts receivable turnover and the average collection period for accounts receivable in days for 2018. (Use 365 days for calculation. Round answers to 1 decimal place, e. g. 15.2.) Accounts receivable turnover times Average collection period days

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  1. 17 December, 14:00
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    8.3 times

    43.8 days

    Explanation:

    Accounts receivable turnover measure the average times the company received their receivable, It measure the efficiency of the company regarding collection from customers. Turnover will be higher if company has low ratio of receivables to sales value.

    Average Receivable can be calculated as below

    Average Receivable = (Accounts Receivable at the beginning of the year + Accounts Receivable at the end of the year) / 2 = ($50,000 + $70,000) / 2 = $60,000

    Net Sales = $500,000

    Formula for Accounts receivable turnover is as follow

    Accounts receivable turnover = Net Sales / Average Receivable

    Accounts receivable turnover = $500,000 / $60,000 = 8.3 times

    Days Sales Receivable is also know as Days receivables. It is an method of estimation of a company for the receivables value. it measure the numbers of days at average account receivable take after sales to convert into cash.

    Formula for Days Sales Receivable is as follow

    Days Sales Receivable = ($60,000 / $500,000) x 365 = 43.8 days
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