Question:
The current asset section of the Moorcroft Outboard Motor Company’s balance sheet reported the
following amounts:
Required:
Determine net sales for 2013.
Answer:
Average collection period = 365 ÷ Accounts receivable turnover = 50 days
Accounts receivable turnover = 365 ÷ 50 = 7.3
Average accounts receivable = ($400,000 + 300,000) ÷ 2 = $350,000
Accounts receivable turnover = Net sales ÷ Average accounts receivable
7.3 = Net sales ÷ $350,000
Net sales = 7.3 x $350,000 = $2,555,000
The current asset section of the Moorcroft Outboard Motor Company’s balance sheet reported the
following amounts:
Required:
Determine net sales for 2013.
Answer:
Average collection period = 365 ÷ Accounts receivable turnover = 50 days
Accounts receivable turnover = 365 ÷ 50 = 7.3
Average accounts receivable = ($400,000 + 300,000) ÷ 2 = $350,000
Accounts receivable turnover = Net sales ÷ Average accounts receivable
7.3 = Net sales ÷ $350,000
Net sales = 7.3 x $350,000 = $2,555,000
