Alda Ltd's accounts receivable for year ended 30 June 2019 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

First, calculate the total sales. The gross margin is 15%, so the cost of goods sold ($382,500) represents 85% of total sales. Total sales = $382,500 / 0.85 = $450,000. To find the days' sales in receivables, divide the accounts receivable by total sales, then multiply by 365 days. Days' sales in receivables = ($150,000 / $450,000) * 365 = 121.7 days.

Alda Ltd's Accounts Receivable for Year Ended 30 June 2019