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The following financial information is for Annapolis Corporation are for the fiscal years ending 2019 & 2018 (all balances are normal): Item/Account 2019 2018 Accounts Receivable $48,000 $30,000 Inventory 42,000 38,000 Net Sales (all credit) 380,000 350,000 Cost of Goods Sold 154,000 152,000 Net Income 27,200 24,800 Use this information to determine the accounts receivable average collection period for FY 2019
The following financial information is for Annapolis Corporation are for the fiscal years ending 2019 & 2018 (all balances are normal):
Item/Account
2019
2018
Accounts Receivable
$48,000
$30,000
Inventory
42,000
38,000
Net Sales (all credit)
380,000
350,000
Cost of Goods Sold
154,000
152,000
Net Income
27,200
24,800
Use this information to determine the accounts receivable average collection period for FY 2019. (Use 365 day year. Round your answers to one decimal place.)
Expert Solution
Average accounts receivable = (Beginning accounts receivable + Ending accounts receivable)/2
= (30,000 + 48,000)/2
= $ 39000
Accounts receivable turnover = Net credit sales/Average accounts receivables
= 380,000/ 39000
= 9.74
Accounts receivable average collection period = 365/Accounts receivable turnover
= 365/ 9.74
= 37.5 days
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