Calculate the days sales in receivables

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Question - The accountant at Parker & Sisters gathered the following selected accounting information:

 

20X9

20X8

Cash at bank

$40,000

$32,000

Short-term investments

27,000

17,000

Accounts receivable (net)

35,000

23,000

Inventory

62,000

65,000

Prepaid expenses

7,000

8,000

Accounts payable

61,000

54,000

Salary payable

16,000

15,000

Income taxes payable

11,000

9,000

Debentures payable (due 20X9)

80,000

80,000

Net credit sales

270,000

235,000

Cost of goods sold

165,000

141,000

Required -

a) Calculate the acid-test ratio for 20X8 and 20X9.

b) Calculate the days' sales in receivables for 20X8 and 20X9. The accounts receivable (net) at 31 December 20X7, were $39,000.

c) Are the ratios improving or deteriorating? Explain?

Reference no: EM132478637

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