Accounts Receivable Analysis

The following data are taken from the financial statements of Rise and Shine Company. Terms of all sales are $2/10,$ n$/30.$

Year $3$ Year $2$ Year $1$

Accounts receivable, end of year $$182,600$ $$197,000$ $$211,800$

Sales $1,157,7801,124,200$

a$.$ For Years $2$ and $3,$ determine $(1)$ the accounts receivable turnover and $(2)$ the number of days' sales in receivables. Assume there are $365$ days in the year. Round intermediate calculations to the nearest whole dollar and final answers to one decimal place.

Year $3$ Year $2$

$1.$ Accounts receivable turnover fill in the blank $1$

$6\mathrm{.}1$

fill in the blank $2$

$5\mathrm{.}5$

$2.$ Number of days' sales in receivables fill in the blank $3$

$59\mathrm{.}8$

days fill in the blank $4$

$66\mathrm{.}3$

days

b$.$ What conclusion can be drawn from these data concerning accounts receivable and credit policies?

The collection of accounts receivable has

declined

$.$ This can be seen in the

decrease

in accounts receivable turnover and the

increase

in the collection period. The company either became

less

aggressive in collecting accounts receivable or

less

restrictive in granting credit to customers in Year $3.$