Mr. Williams, the owner of Williams Produce, wants to maintain control over accounts re-ceivable. He understands that days’ sales in receivables and accounts receivable turnover will give a good indication of how well receivables are being managed. Williams Produce does 60% of its business during June, July, and August. Mr. Williams provided the following pertinent data:

Required
a. Compute the days’ sales in receivables for July 31, 2011, and December 31, 2011, based on the accompanying data.
b. Compute the accounts receivable turnover for the period ended July 31, 2011, and December 31, 2011. (Use year- end gross receivables.)
c. Comment on the results from (a) and(b).

Transcribed Image Text:

For Year Ended December 31, 20 For Year Ended July 31, 2011 Net sales Receivables, less allowance for doubtful accounts $800,000 $790,000 Beginning of period (allowance January1 S3,000; August 1, $4,000) 50,000 89,000 End of period (allowance December 31, S3,500; July 31, S4,100) 55,400 90,150