Question

24
mifflin company reported the following for the current year:
net sales $ 62,700
cost of goods sold 41,800
beginning balance in accounts receivable 14,600
ending balance in accounts receivable 6,300
compute
(a) accounts receivable turnover and
(b) days’ sales uncollected.
hint: accounts receivable turnover uses average accounts receivable, and days’ sales uncollected uses the ending balance in accounts receivable.
complete this question by entering your answers in the table below.
accounts receivable turnover
days sales uncollected
compute the accounts receivable turnover.
accounts receivable turnover
numerator / denominator = answer
net sales / cost of goods sold = accounts receivable turnover
0 times
days sales uncollected >

Explanation:

Step1: Calculate average accounts receivable

Average accounts receivable = $\frac{\text{Beginning accounts receivable} + \text{Ending accounts receivable}}{2}$ = $\frac{14,600 + 6,300}{2}$ = $\frac{20,900}{2}$ = $10,450$

Step2: Calculate accounts receivable turnover

Accounts receivable turnover = $\frac{\text{Net sales}}{\text{Average accounts receivable}}$ = $\frac{62,700}{10,450}$ = 6 times

Step3: Calculate days' sales uncollected

Days' sales uncollected = $\frac{365}{\text{Accounts receivable turnover}}$ (using ending accounts receivable for turnover? Wait, hint says days' sales uncollected uses ending balance. Wait, formula for days' sales uncollected is $\frac{\text{Ending accounts receivable}}{\text{Net sales}} \times 365$. Let's use that. So Ending accounts receivable is 6,300. So $\frac{6,300}{62,700} \times 365$ ≈ 36.5 days (wait, no: $\frac{6300}{62700} = 0.100478$, times 365 ≈ 36.67 days, approx 37 days. But first, accounts receivable turnover is 6.

Answer:

(a) Accounts Receivable Turnover: 6 times
(b) Days' Sales Uncollected: Approximately 37 days (or more precise: $\frac{6300}{62700} \times 365 \approx 36.7$ days)