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Question
Based on the following data for Jake Company and using a 365-day year, compute (a) the accounts receivable turnover and (b) days' sales in receivables for Year 2. Round to two decimal places. The industry average accounts receivable turnover is 20, and the industry average days' sales in receivables is 25. (c) Comment on Jake Company’s situation.
| 12/31/Year 1 accounts receivable | $ 100,000 |
| 12/31/Year 2 accounts receivable | 70,000 |
| For the year ended 12/31/Year 1, sales | 1,050,000 |
| For the year ended 12/31/Year 2, sales | 1,200,000 |
Answer
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