Barga Co.'s net sales for Year 1 and Year 2 are $730,000 and $1,095,000, respectively. Its year-end balances of accounts receivable follow: Year 1, $65,000; and Year 2, $123,000. a. Compute its days' sales uncollected at the end of each year. Round the number of days to one decimal. b. Did days' sales uncollected improve or worsen in Year 2 versus Year 1?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The initial analysis should include the following:

  • The ratio equation
  • The calculation of the ratio using the equation and the pre-assigned Quick Study or Exercise from the textbook. 
  • Use the result in a sentence; i.e. For every dollar invested in assets the company is earning 22.4 cents or 22.4% in net income. 
  • Then explain whether this is a good result or a result that needs improving.
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**Exercise 8-15: Liquid Assets and Accounts Receivable**

Barga Co.’s net sales for Year 1 and Year 2 are $730,000 and $1,095,000, respectively. Its year-end balances of accounts receivable are as follows: 
- Year 1: $65,000
- Year 2: $123,000

1. **a. Compute its days’ sales uncollected at the end of each year.** 
   - Round the number of days to one decimal.

2. **b. Did days’ sales uncollected improve or worsen in Year 2 versus Year 1?**
Transcribed Image Text:**Exercise 8-15: Liquid Assets and Accounts Receivable** Barga Co.’s net sales for Year 1 and Year 2 are $730,000 and $1,095,000, respectively. Its year-end balances of accounts receivable are as follows: - Year 1: $65,000 - Year 2: $123,000 1. **a. Compute its days’ sales uncollected at the end of each year.** - Round the number of days to one decimal. 2. **b. Did days’ sales uncollected improve or worsen in Year 2 versus Year 1?**
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