Accounts receivable turnover and days’ sales in receivables For two recent years, Robinhood Company reported the following: 20Y9 20Y8 Sales $7,980,000 $6,726,000 Accounts receivable: Beginning of year 610,000 530,000 End of year 590,000 610,000 a. Determine the accounts receivable turnover for 20Y9 and 20Y8. Round answers to one decimal place. 20Y8: 20Y9: b. Determine the days’ sales in receivables for 20Y9 and 20Y8. Use 365 days and round all calculations to one decimal place. 20Y8: days 20Y9: days c. Are the changes in the accounts receivable turnover and days’ sales in receivables from 20Y8 to 20Y9 favorable or unfavorable?
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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.
For two recent years, Robinhood Company reported the following:
| 20Y9 | 20Y8 | |
| Sales | $7,980,000 | $6,726,000 |
| Accounts receivable: | ||
| Beginning of year | 610,000 | 530,000 |
| End of year | 590,000 | 610,000 |
a. Determine the accounts receivable turnover for 20Y9 and 20Y8. Round answers to one decimal place.
20Y8:
20Y9:
b. Determine the days’ sales in receivables for 20Y9 and 20Y8. Use 365 days and round all calculations to one decimal place.
20Y8: days
20Y9: days
c. Are the changes in the accounts receivable turnover and days’ sales in receivables from 20Y8 to 20Y9 favorable or unfavorable?
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