The following information pertains to Napa Merchandising Company.

Merchandise inventory at end of year $50,000

Accounts receivable at beginning of year 54,000

Cash sales made during the year 27,000

Gross profit on sales 30,000

Accounts receivable written off during the year 1,500

Purchases made during the year 90,000

Accounts receivable collected during the year 117,000

Merchandise inventory at beginning of year 54,000

Instructions:

Calculate the amount of credit sales made during the year. (Hint:You will need to use income statement relationshipsintroduced in Chapter 5in order to determine this.)

Calculate the balance of accounts receivable at the end of the year.

Compute the following ratios: accounts receivable turnover, and average collection period in days. Assume the allowance for doubtful accounts was $1,000 both at the beginning and end of the year.