Accounts Receivable Analysis The following account balances are taken from the records of the Faraway Travel Agency:

December 31 2010 2009 2008 Accounts receivable $150,000 $100,000 $80,000 2010 2009 Net credit sales $600,000 $540,000 Faraway extends credit terms requiring full payment in 60 days, with no discount for early payment.

Required 1. Compute Faraway’s accounts receivable turnover ratio for 2010 and 2009.
2. Compute the number of days’ sales in receivables for 2010 and 2009. Assume 360 days in a year.
3. Comment on the effi ciency of Faraway’s collection efforts over the two-year period.AppendixLO1