### Instruction for Calculating Days' Sales Uncollected**Objective:**1. **Compute days’ sales uncollected.**2. **Evaluate whether the ratio has improved or worsened in the current year.****Steps to Follow:**You need to complete this exercise by inputting your responses in the designated tabs below.#### Task: Compute Days’ Sales Uncollected**Table: Days’ Sales Uncollected Calculation**| | Numerator | / | Denominator | × | Days | = | Days' Sales Uncollected ||--------|-----------|---|-------------|---|------|---|--------------------------|| Current Year | | | | × | | = | days || 1 Year Ago | | | | × | | = | days |- **Required 1A Tab**: Input your computations for days’ sales uncollected for both the current year and one year ago.- **Required 1B Tab**: After calculating, determine if the ratio improved or worsened in the current year compared to one year ago.Use the placeholders to enter your calculated values to analyze the change over the period. **Simon Company's Financial Overview****Balance Sheets (As of December 31)**- **Current Year** - **Assets** - Cash: $26,605 - Accounts receivable, net: $89,200 - Merchandise inventory: $114,500 - Prepaid expenses: $8,568 - Plant assets, net: $221,258 - **Total assets**: $460,131 - **Liabilities and Equity** - Accounts payable: $112,281 - Long-term notes payable: $84,775 - Common stock, $10 par value: $162,500 - Retained earnings: $100,575 - **Total liabilities and equity**: $460,131- **1 Year Ago** - **Assets** - Cash: $31,099 - Accounts receivable, net: $62,900 - Merchandise inventory: $85,000 - Prepaid expenses: $8,163 - Plant assets, net: $209,503 - **Total assets**: $396,665 - **Liabilities and Equity** - Accounts payable: $65,696 - Long-term notes payable: $89,408 - Common stock, $10 par value: $162,500 - Retained earnings: $79,061 - **Total liabilities and equity**: $396,665- **2 Years Ago** - **Assets** - Cash: $32,725 - Accounts receivable, net: $50,800 - Merchandise inventory: $58,000 - Prepaid expenses: $3,636 - Plant assets, net: $192,139 - **Total assets**: $337,300 - **Liabilities and Equity** - Accounts payable: $43,633 - Long-term notes payable: $73,052 - Common stock, $10 par value: $162,500 - Retained earnings: $58,115 - **Total liabilities and equity**: $337,300**Income Statements**- **For Year Ended December 31** - **Current Year** - Sales: $598,170 - Cost of goods sold: $364,884

Days sales uncollected is the ratio which shows thr average number of days the receivables remains uncollected. It is the liquidity ratio.Working :- 1) Calculation of average accounts receivable :- Calculation of average accounts receivable Current year 1 year ago Beginning balance 62,900 50,800 Ending balance 89,200 62,900 Total 152,100 113,700 divided by 2 2 2 Average accounts receivable 76,050 56,850 Requirement 1A) Days sales uncollected Numerator / Denominator × Days = Days sales uncollected Average accounts receivable / Net sales × 365 = Days sales uncollected Current year $76,050 / $598,170 × 365 = 46 days 1 year ago $56,850 / $472,031 × 365 = 44 days Requirement 1B) Days sales uncollected worsened in the current year as it increases in current year.

Business

Accounting

1-a) Compute days' sales uncollected. 1-b) For each ratio, determine if it improved or worsened in the current year. Complete this question by entering your answers in the tabs below. Required 1A Required 1B Compute days' sales uncollected. Current Year: 1 Year Ago: Numerator: Days' Sales Uncollected 1 1 1 1 Denominator: < Required 1A x x X X Days Required 1B = = = = Days' Sales Uncollected Days' sales uncollected days days

1-a) Compute days' sales uncollected. 1-b) For each ratio, determine if it improved or worsened in the current year. Complete this question by entering your answers in the tabs below. Required 1A Required 1B Compute days' sales uncollected. Current Year: 1 Year Ago: Numerator: Days' Sales Uncollected 1 1 1 1 Denominator: < Required 1A x x X X Days Required 1B = = = = Days' Sales Uncollected Days' sales uncollected days days

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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