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A Company Reported Net Sales for Year 1 of $285,000

question 7

Essay

A company reported net sales for Year 1 of $285,000 and $575,000 for Year 2. The year-end balances of accounts receivable were $49,000 for Year 1 and $85,000 for Year 2. Calculate the days' sales uncollected at the end of each year for this company and describe any changes in the apparent liquidity of the company's receivables.


Definitions:

Usage

Refers to the consumption or allocation of resources, often related to utilities, software, services, or raw materials in a business context.

Capital Expenditures

Capital expenditures refer to funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment.

Plant Asset

Long-term tangible assets that are used in the production of goods or services and are not intended for resale.

Productive

Characterized by achieving significant results or output relative to the input or effort expended.

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