Answered

Baxley Brothers has a DSO of 17 days, and its annual sales are $6,570,000. What is its accounts receivable balance? Assume that it uses a 365-day year. Round your answer to the nearest cent.

Answer :

zainsubhani

Answer:

Accounts receivable balance=$306,000.

Explanation:

Given Data:

DSO=17 days

Annual sales=$6,570,000

Number of days in year=365 days

Required:

Accounts receivable balance=?

Solution:

[tex]DSO=\frac{Account\s receivable}{Average\ Sales\ Per\ Day}[/tex]

Average sales per day:

[tex]Average\ sales\ Per\ day=\frac{Annual\ Sales}{Days\ In\ year}\\ Average\ sales\ Per\ day=\frac{\$6,570,000}{365}\\ Average\ sales\ Per\ day=\$18,000[/tex]

Calculating account receivable:

[tex]Account\ receivable=DSO*Average\ sales\ Per\ day\\Account\ receivable=17*\$18,000\\Account\ receivable=\$306,000[/tex]

Accounts receivable balance=$306,000.

Other Questions