The L. Solomon Company would like to compare its days’ sales in receivables with that of a competitor, L. Konrath Company. Both companies have had similar sales results in the past, but the L. Konrath Company has had better profit results. The L. Solomon Company suspects that one reason for the better profit results is that the L. Konrath Company did a better job of managing receivables. The L. Solomon Company uses a calendar year that ends on December 31, while the L. Konrath Company uses a fiscal year that ends on July 31. Information related to sales and receivables of the two companies follows:

For Year Ended December 31, 20XX L. Solomon Company Net sales $1,800,000 Receivables, less allowance for doubtful accounts of $8,000 110,000 For Year Ended July 31, 20XX L. Konrath Company Net sales $1,850,000 Receivables, less allowance for doubtful accounts of $4,000 60,000 Required

a. Compute the days’ sales in receivables for both companies. (Use yearend gross receivables.)

b. Comment on the results.

P 6-5a. The P. Gibson Company has computed its accounts receivable turnover in days to be 36.

Required Compute the accounts receivable turnover per year.

P 6-5b. The P. Gibson Company has computed its accounts receivable turnover per year to be 12.
Required Compute the accounts receivable turnover in days.
P 6-5c. The P. Gibson Company has gross receivables at the end of the year of $280,000 and net sales for the year of $2,158,000.
Required Compute the days’ sales in receivables at the end of the year.
P 6-5d. The P. Gibson Company has net sales of $3,500,000 and average gross receivables of $324,000.
Required Compute the accounts receivable turnover.