The following data are taken from the financial statements of Outdoor Patio Inc. Terms of all sales are 2/10, n/60. Year 3 Year 2 Year 1 Accounts receivable, end of year $ 900,000 $ 750,000 $600,000 Sales 5,280,000 3,915,000 a. For Years 2 and 3, determine (1) the accounts receivable turnover and (2) the days' sales in receivables. Assume there are 365 days in the year. Round intermediate calculations to the nearest whole dollar and final answers to one decimal place. Year 3 Year 2 1. Accounts receivable turnover ? ? 2. Number of days' sales in receivables ? days ? days b. What conclusion can be drawn from these data concerning accounts receivable and credit policies? The collection of accounts receivable has (declined or improved) . This can be seen in the (decrease or increase) in accounts receivable turnover and the (increase or reduction) in the collection period. The company either became (more or less) aggressive in collecting accounts receivable or (more or less) restrictive in granting credit to customers in Year 3
The following data are taken from the financial statements of Outdoor Patio Inc. Terms of all sales are 2/10, n/60. Year 3 Year 2 Year 1 Accounts receivable, end of year $ 900,000 $ 750,000 $600,000 Sales 5,280,000 3,915,000 a. For Years 2 and 3, determine (1) the accounts receivable turnover and (2) the days' sales in receivables. Assume there are 365 days in the year. Round intermediate calculations to the nearest whole dollar and final answers to one decimal place. Year 3 Year 2 1. Accounts receivable turnover ? ? 2. Number of days' sales in receivables ? days ? days b. What conclusion can be drawn from these data concerning accounts receivable and credit policies? The collection of accounts receivable has (declined or improved) . This can be seen in the (decrease or increase) in accounts receivable turnover and the (increase or reduction) in the collection period. The company either became (more or less) aggressive in collecting accounts receivable or (more or less) restrictive in granting credit to customers in Year 3
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The following data are taken from the financial statements of Outdoor Patio Inc. Terms of all sales are 2/10, n/60.
| Year 3 | Year 2 | Year 1 | ||||
| $ 900,000 | $ 750,000 | $600,000 | ||||
| Sales | 5,280,000 | 3,915,000 |
a. For Years 2 and 3, determine (1) the accounts receivable turnover and (2) the days' sales in receivables. Assume there are 365 days in the year. Round intermediate calculations to the nearest whole dollar and final answers to one decimal place.
| Year 3 | Year 2 | |||
| 1. Accounts receivable turnover | ? | ? | ||
| 2. Number of days' sales in receivables | ? | days | ? | days |
b. What conclusion can be drawn from these data concerning accounts receivable and credit policies?
The collection of accounts receivable has (declined or improved) . This can be seen in the (decrease or increase) in accounts receivable turnover and the (increase or reduction) in the collection period. The company either became (more or less) aggressive in collecting accounts receivable or (more or less) restrictive in granting credit to customers in Year 3.
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