Compute the days sales in receivables

Reference no: EM131002041

Mr. Williams, the owner of Williams Produce, wants to maintain control over accounts receivable. He understands that days' sales in receivables and accounts receivable turnover will give a good indication of how well receivables are being managed. Williams Produce does 60% of its business during June, July, and August. Mr. Williams provided the following pertinent data:

	For Year Ended December 31, 2007	For Year Ended July 31, 2007
Net sales	$800,000	$790,000
Receivables, less allowance for doubtful accounts
Beginning of period (allowance
January 1, $3,000; August 1, $4,000)	50,000	89,000
End of period (allowance December 31,
$3,500; July 31, $4,100)	55,400	90,150

Required:

a. Compute the days' sales in receivables for July 31, 2007, and December 31, 2007, based on the accom- panying data.

b. Compute the accounts receivable turnover for the period ended July 31, 2007, and December 31, 2007. (Use year-end gross receivables.)

c. Comment on the results from (a) and (b).

Reference no: EM131002041

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