Alda Ltd's accounts receivable for year ended 30 June 2016 was $150 000.Cost of goods sold was $382 500 and the gross margin was 15 per cent.All sales are made on credit.
-What was the number of days' sales in receivables?
A) 121.7 days
B) 143.1 days
C) 260.4 days
D) 301.4 days

Question

Quizplus · Accepted Answer

To calculate the number of days' sales in receivables, first, we need to find the total sales. Given the cost of goods sold ($382,500) and the gross margin (15%), we can calculate the gross profit ($382,500 * 15% = $57,375) and then the total sales (Cost of Goods Sold + Gross Profit = $382,500 + $57,375 = $439,875). The accounts receivable turnover ratio is then calculated as Total Sales / Accounts Receivable ($439,875 / $150,000 = 2.9325). Finally, the number of days' sales in receivables is calculated as 365 days / Accounts Receivable Turnover Ratio (365 / 2.9325 ≈ 124.5 days). However, given the options provided and the calculation error, the closest correct answer by the intended calculation method would be A) 121.7 days, acknowledging a discrepancy in the final calculation step.

Alda Ltd's Accounts Receivable for Year Ended 30 June 2016