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Average accounts receivable is $99,500 and sales are $994,000. Using a 365-day year, what is the number of days' sales in receivables (to one decimal)?
A39.7 days
B36.5 days
C33.4 days
D10.0 days
Answer & Solution
Correct answer: B. 36.5 days
1. Sales per day = $994,000 / 365 = $2,723.
2. Days' sales in receivables = average AR / sales per day = $99,500 / $2,723.
3. = 36.5 days.
4. Trap: 10.0 (option D) is the receivables turnover, not the days figure.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §7.3.4 "Number of Days' Sales in Receivables", p.297_
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