E6-3a.pdf

Comments:

This is an opportunity to work with Accounts Receivable Turnover and, for future reference, Days in Receivables.

Accounts receivable Turnover = Net Credit Sales / Average Accounts receivable

Days Accounts receivable outstanding = Days in receivables = 365 / Accounts receivable Turnover

Some problems will separate out net credit sales. Some problems will not. You always go with the information given. If

the problem does not separate the sales into credit and cash, then include all of the sales as credit. In a sense, the

resulting average will be a little low because the cash sales are instant collections.

Problem Statement: