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Explain the chart below: 2016 2017 Net Sales $   135,987,000.00 $   177,866,000.00 Beginning Accounts Receivable $       5,654,000.00 $       8,339,000.00 Ending Accounts Receivable $       8,339,000.00 $     13,164,000.00 Average Accounts Receivable (Beginning Accounts Receivable + Ending...

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Finance

Explain the chart below:

2016

2017

Net Sales

$   135,987,000.00

$   177,866,000.00

Beginning Accounts Receivable

$       5,654,000.00

$       8,339,000.00

Ending Accounts Receivable

$       8,339,000.00

$     13,164,000.00

Average Accounts Receivable

(Beginning Accounts Receivable + Ending Accounts Receivable) /2

$      6,996,500.00

$    10,751,500.00

Average Collection Period

(Average Accounts Receivable * 365 days) / Net sales

$                      18.78

$                      22.06

Answer & Explanation Solved by verified expert
3.6 Ratings (448 Votes)

2016 2017
Net Sales=(A) $ 13,59,87,000.00 $           17,78,66,000.00
Beginning Accounts Receivable $       56,54,000.00 $                 83,39,000.00
Ending Accounts Receivable(Including Note) $       83,39,000.00 $             1,31,64,000.00
Average Accounts Receivable=(Beginning Accounts Receivable+Ending Accounts Receivable/2)=($5654000+$8339000)/2,($8339000+$13164000)/2=(B) $       69,96,500.00 $             1,07,51,500.00
Accounts Receivable Turnover=Sales/Average accounts receivable=(A)/(B) 19.44 16.54 Times
Average collection period=(365/Accounts receivable turnover)
(365/19.44),(365/16.54) 18.78 22.06 Days
In this case Average collection period is increased in 2017,due to various reasons:-
1) More credit to customers for longer period.
2) Less efforts will be taken for collect amount from customers.

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Transcribed Image Text

Explain the chart below:20162017Net Sales$   135,987,000.00$   177,866,000.00Beginning Accounts Receivable$       5,654,000.00$       8,339,000.00Ending Accounts Receivable$       8,339,000.00$     13,164,000.00Average Accounts Receivable(Beginning Accounts Receivable + Ending Accounts Receivable) /2$      6,996,500.00$    10,751,500.00Average Collection Period(Average Accounts Receivable * 365 days) / Net sales$                      18.78$                      22.06

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