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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	$135,400		$142,000		$150,000
Sales	818,330		759,200

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		fill in the blank 2
2. Number of days' sales in receivables	fill in the blank 3	days	fill in the blank 4	days

b. What conclusion can be drawn from these data concerning accounts receivable and credit policies? The collection of accounts receivable has

declinedimproved

. This can be seen in the

decreaseincrease

in accounts receivable turnover and the

increasereduction

in the collection period. The company either became

lessmore

aggressive in collecting accounts receivable or

lessmore

restrictive in granting credit to customers in Year 3.