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Alpha’s net accounts receivable were $500,000 at December 31, 2015, and $600,000 at December 31, 2016. Net cash sales for 2016 were $200,000. The accounts receivable turnover for 2016 was 5.0. Use this information to determine the Fiscal Year 2016: (Round & enter your answers to one decimal place for non-dollar ratios and enter the value. For dollar ratio enter as whole dollars only.)
1. Total Net Sales
2. Total Net Credit Sales
Expert Answer
| Account Receivable Turnover Ratio = | |||
| Net Annual Credit Sales / Average Account Recevable | |||
| Net Annual Credit Sales = Average Account Recevable * Account Recevable Turnover Ration | |||
| Average Account Recevable = (Beginning Account Recivable + Ending Account Receivable) / 2 | |||
| Average Account Recevable = ( $500,000 + $600,000) / 2 | |||
| Average Account Recevable = $550,000 | |||
| Net Annual Credit Sales = Average Account Recevable * Account Recevable Turnover Ration | |||
| Net Annual Credit Sales = $550,000 * 5 | |||
| Net Annual Credit Sales = $ 27,50,000 | |||
| Total Net Sales = Cash Sales + Credit Sales | |||
| Total Net Sales = $200,000 + $ 27,50,000 | |||
| Total Net Sales = $ 29,50,000 | |||
| Answer = 1 = $ 29,50,000 | |||
| Answer = 2 =Total Net Credit Sales = $ 27,50,000 | |||
