Whybird, a sole trader, has been advised by his accountant to keep an eye on the number
Question:
Whybird, a sole trader, has been advised by his accountant to keep an eye on the number of days his debtors take to pay. The accountant has explained how to calculate the debtors turnover period but Whybird doesn't really understand. He asks you to do the calculation for him. Extracts from the last two years’ accounts show the following figures:
20X5 20X4 if f£
Sales 180 630 178 440 Less: returns (1 300) (1 060)
dpAO 330 177 380 AB Sy ea 20X5 20X4 16 f£
Debtors 20 982 PAL XIN Wd Less: provision for doubtful debts (306) (297)
20 676 20 820 Calculate the debtors turnover period for Whybird for both years to one decimal place. Has the debtors turnover period improved or worsened in 20X5?
Step by Step Answer:
Financial Accounting For Non Specialists
ISBN: 9781844802050
2nd Edition
Authors: Catherine Gowthorpe