The Following Data Are Taken from the Financial Statements A Assuming That Credit Terms on All Sales Are N/45, Determine

question 147

Essay

The following data are taken from the financial statements:
$\begin{array}{lrr}& { \text { Current }}& { \text {Preceding}}\\& \underline { \text { Year }}& \underline { \text { Year }}\\\text { Average accounts receivable net } & \$ 123,000 & \$ 95,000 \\\text { Accounts receivable net, end of year } & 129,012 & 87,516 \\\text { Sales on account } & 950,000 & 825,000\end{array}$
a. Assuming that credit terms on all sales are n/45, determine for each year 1 the accounts receivable turnover and 2 the number of days' sales in receivables.
Round intermediate calculations to whole numbers and final answers to two decimal places.
b. Comment on any significant trends revealed by the data.

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Definitions:

Tax

Compulsory financial charges or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Price Ceiling

A Price Ceiling is a government-imposed limit on how high a price can be charged for a product, intended to protect consumers from exorbitant prices.

Supply Curve

A graph showing the relationship between the quantity of a good that producers are willing to sell and the price of the good.

Gasoline

A petroleum-derived flammable liquid primarily used as fuel in internal combustion engines.