Analysis of Accounts Receivable and Credit Policy

Based on customer feedback, Ted Pendleton, manager of Gray Company, which produces photo supplies, decided to grant more liberal credit terms. Ted chose to allow customers to have $60$ days before full payment of the account was required. From $20$X$2$ through $20$X$4,$ Gray's credit policy for sales on account was $2/10,$ n$/30.$ In $20$X$5,$ the policy of $2/10,$ n$/60$ became effective. By the end of $20$X$6,$ Gray was beginning to experience cash flow problems. Although sales were strong, collections were sluggish, and the company was having a difficult time meeting its short$-$term obligations. Ted noted that the cash flow problems materialized after the credit policy was changed and wondered if there was a connection. To help assess the situation, he gathered the following data pertaining to the collection of accounts receivable. $($Balances are end$-$of$-$year balances. The $20$X$2$ balance was the same as that in $20$X$1.)$

Line Item Description $20$X$220$X$320$X$420$X$520$X$6$

Accounts receivable $$100,000$ $$120,000$ $$100,000$ $$150,000$ $$190,000$

Net credit sales $500,000600,000510,000510,000520,000$

Required:

$1.$ Compute the number of times that accounts receivable turned over per year for each of the $5$ years. Also express the turnover in days in addition to times per year. Round the AR turnover to two decimals. Use rounded ratio in determining Turnover in Days; assume $365$ days per year; and enter answer to one decimal place.