Heal of Approval Spa reports the following information for the years ended December 31, 20X2 and 20X3:
20X3 20X2
Sales $ 640,000 $720,000
Accounts Receivable 40,000 60,000
Sales consisted of 80% credit sales and 20% cash sales during 20X2 and 20X3.
From the information given previously for Heal of Approval Spa, determine the
a. accounts receivable turnover for 20X3.
b. days to collect accounts receivable for 20X3.
a. The accounts receivable turnover for 20X3 is
(80% × $640,000 )/[($40,000 + $60,000 )/2] = 10.24
b. The days to collect accounts receivable for 20X3 is
365 days/10.24 = 35.6 days
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