Compute the accounts receivable turnover for the period ended July

Mr. Williams, the owner of Williams Produce, wants to maintain control over accounts receivable. He understands that days’ sales in receivables and accounts receivable turnover will give a good indication of how well receivables are being managed. Williams Produce does 60% of its business during June, July, and August. Mr. Williams provided the pertinent data:

For Year Ended

For Year

December 31,

Ended

2000

July 31, 2000

Net sales

$800,000

$790,000

Receivables, less allowance for doubtful accounts

Beginning of period (allowance

January 1, $3,000; August 1, $4,000)

50,000

89,000

End of period (allowance December 31,

$3,500; July 31, $4,100)

55,400

90,150

Required a. Compute the days’ sales in receivables for July 31, 2000, and December 31, 2000, based on the accompanying data.

b. Compute the accounts receivable turnover for the period ended July

31, 2000, and December 31, 2000. (Use year-end gross receivables.)

c. Comment on the results from (a) and (b).

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