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Last year, Dogwood Company had net sales of $9,130,000 and cost of goods sold of $4,812,000. Dogwood had the following balances:
| January 1 | December 31 | |
| Accounts receivable | $725,000 | $775,000 |
| Inventory | 450,000 | 425,000 |
Required:
Note: Round answers to one decimal place. Assume 365 days per year.
1. Calculate the average accounts receivable.
$
2. Calculate the accounts receivable turnover ratio.
times
3. Calculate the accounts receivable turnover in days.
days
Expert Answer
1.Average AR=(Beginning AR_+Ending AR)/2
=($725000+$775000)/2
=$750,000.
2.AR turnover=Sales/Average AR
=($9,130,000/750,000)
=12.2 times(Approx).
3.Ar turnover in days=365/AR turnover
=365/12.1733(Approx)
=30 days(Approx).
