4955EN A B Michaels' foods Sunshine enterprises C Credit sales 60,600 30,100 Accounts Accounts receivable receivable Jan-01 Dec-31 6,200 1,800 15 Solution: 16 a)Accounts receivables turnover 17 18 19 20 21 b) Days to collect 22 23 8,100 2,050 8 9 Required 10 a) Calculate the accounts receivable turnover for each company assuming all sales are on account 11 b) Calculate the average number of days required by each company to collect its receivables 12 c) Which company appears to be more efficient in handling its account receivable? 13 d) What additional information would be helpful in evaluating management's handling of the collection of accounts receivable? 14 formula = credit sales / average accounts receivable Michaels food 8.48 Sunshine enterprises =C7/ no of days 365 formula = 365 days / accounts receivable turnover (days) Michaels food

Required a) Calculate the accounts receivable turnover for each company assuming all sales are on account b) Calculate the average number of davs required by each company to collect its recelvables c) Which company appears to be more efficient in handline its account recewable? d) What additional information would be helpful in evaluatire management's handing of the collection of accounts receivatie? Solution