Feltzen CO. reports sales of $10,000,000 for 2002 with a gross profit margin of 40%. 20% of its...
Question:
Feltzen CO. reports sales of $10,000,000 for 2002 with a gross profit margin of 40%. 20% of its sales are on credit.
| 2001 | 2002 | |
| AR | $150,000 | 170,000 |
| Inventory | 900,000 | 1,000,000 |
| AP | 1,100,000 | 1,200,000 |
Accounts receivable days outstanding at the end of 2002 using the year-end receivable balance.
a. 30.6 days
b. 28.8 days
c. 27 days
d. 6.1 days
Days sales outstanding :
Days sales outstanding is calculated as average account receivable divided by net credit sale multiply by the number of days. The average account receivable is calculated as beginning account receivable plus ending account receivable divided by 2.
Answer and Explanation: 1
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View this answerAccounts receivable days outstanding = Average account receivable / Net credit Sale *360 Days
= ($150,000 + $170,000) /2 / $10,000,000 *20% *360
=...
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Average Collection Period: Formula & Analysis
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