Explain the chart below: 2016 2017 Net Sales $ 135,987,000.00 $ 177,866,000.00 Beginning Accounts Receivable $ 5,654,000.00 $ 8,339,000.00 Ending Accounts Receivable $ 8,339,000.00 $ 13,164,000.00 Average Accounts Receivable (Beginning Accounts Receivable + Ending...

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Finance

Explain the chart below:
2016
2017
Net Sales
$   135,987,000.00
$   177,866,000.00
Beginning Accounts Receivable
$       5,654,000.00
$       8,339,000.00
Ending Accounts Receivable
$       8,339,000.00
$     13,164,000.00
Average Accounts Receivable
(Beginning Accounts Receivable + Ending Accounts Receivable) /2
$      6,996,500.00
$    10,751,500.00
Average Collection Period
(Average Accounts Receivable * 365 days) / Net sales
$                      18.78
$                      22.06

Answer & Explanation Solved by verified expert

3.6 Ratings (448 Votes)

	2016	2017
Net Sales=(A)	$ 13,59,87,000.00	$ 17,78,66,000.00
Beginning Accounts Receivable	$ 56,54,000.00	$ 83,39,000.00
Ending Accounts Receivable(Including Note)	$ 83,39,000.00	$ 1,31,64,000.00
Average Accounts Receivable=(Beginning Accounts Receivable+Ending Accounts Receivable/2)=($5654000+$8339000)/2,($8339000+$13164000)/2=(B)	$ 69,96,500.00	$ 1,07,51,500.00
Accounts Receivable Turnover=Sales/Average accounts receivable=(A)/(B)	19.44	16.54	Times


Average collection period=(365/Accounts receivable turnover)
(365/19.44),(365/16.54)	18.78	22.06	Days


In this case Average collection period is increased in 2017,due to various reasons:-
1) More credit to customers for longer period.
2) Less efforts will be taken for collect amount from customers.

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Transcribed Image Text

Explain the chart below:20162017Net Sales$ 135,987,000.00$ 177,866,000.00Beginning Accounts Receivable$ 5,654,000.00$ 8,339,000.00Ending Accounts Receivable$ 8,339,000.00$ 13,164,000.00Average Accounts Receivable(Beginning Accounts Receivable + Ending Accounts Receivable) /2$ 6,996,500.00$ 10,751,500.00Average Collection Period(Average Accounts Receivable * 365 days) / Net sales$ 18.78$ 22.06

		2016	2017
Net Sales		$ 135,987,000.00	$ 177,866,000.00
Beginning Accounts Receivable		$ 5,654,000.00	$ 8,339,000.00
Ending Accounts Receivable		$ 8,339,000.00	$ 13,164,000.00
Average Accounts Receivable	(Beginning Accounts Receivable + Ending Accounts Receivable) /2	$ 6,996,500.00	$ 10,751,500.00
Average Collection Period	(Average Accounts Receivable * 365 days) / Net sales	$ 18.78	$ 22.06