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Question: The following account balances are taken from

The following account balances are taken from the records of the Faraway Travel Agency:
The following account balances are taken from the records of the Faraway Travel Agency:


Faraway extends credit terms requiring full payment in 60 days, with no discount for early payment.

Required:
1. Compute Faraway’s accounts receivable turnover ratio for 2017 and 2016.
2. Compute the number of days’ sales in receivables for 2017 and 2016. Assume 360 days in a year.
3. Comment on the efficiency of Faraway’s collection efforts over the two-year period.

Faraway extends credit terms requiring full payment in 60 days, with no discount for early payment. Required: 1. Compute Faraway’s accounts receivable turnover ratio for 2017 and 2016. 2. Compute the number of days’ sales in receivables for 2017 and 2016. Assume 360 days in a year. 3. Comment on the efficiency of Faraway’s collection efforts over the two-year period.





Transcribed Image Text:

December 31 2017 2016 2015 Accounts receivable $150,000 $100,000 $80,000 2017 2016 Net credit sales $600,000 $540,000


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