Discover reported $431,818 in net sales and $31,677 in accounts receivable for the current period. For the same period, Viza reported $365,955 in net sales and $23,610 in accounts receivable. Calculate the days' sales uncollected for both companies and indicate which company is doing a better job in managing the collection of its receivables. Note: Do not round intermediate calculations. Round your "Days' Sales Uncollected" to 1 decimal place.
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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.
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